prepare for the extraction point we've been briefed on all the important stories and events in the world of emerging information now it's time to extract the data and turn it into action live from the silicon angle studios in the heart of Silicon Valley this is extraction point with John furrier okay we're live back in the palo alto studios i'm john furrier for the extraction point we extract the signal from the noise and my special guest today i'm excited to have here is Paul Martino who is the founder of aggregate knowledge and also storied entrepreneur in Silicon Valley who now lives in Philly with his family comes out here Paul is known for among other things being a great entrepreneur tech geek loves tech loves to build build startups started one of the first social networks with Mark Pincus called tribe started his own company funded by Kleiner Perkins with his partner Chris law called aggregate knowledge which is booming and doing great and now more famous for being the first round investor in zynga company that is exploding with revenue as Kleiner Perkins said is the of all their portfolio comes in the history more than Google's made more money faster than anybody Paul Martino welcome to the extraction point great to see you John as always awesome to see you first I got to start with your now I forgot to mention that you're actually running a venture firm so in addition to being famous with Zynga you're running bullpen capital so first give the folks out there an update and first confirm or deny you were in the first round of Zynga or not yes the the first round of Zynga there were several institutional investors and several individual investors Morocco me Reid Hoffman were individual investors Avalon Union Square accelerator ventures and foundry where the institutional investors in that first round Peter was Peter Thiel yeah Peter was also an individual investor in the first round so that's officially the first round investors of Zynga we have clarified that and that is now hot on the books but now you're you've been successfully founded aggregate knowledge you know have a CEO running that what's the update with aggregate knowledge yeah so great guy runs that company as a guy you need to meet and have on this show Dave jakubowski aggregate knowledge really went in a direction where all of the focus was on providing data and analytics to the major ad agencies and John John Nelson who started organic one of the first agencies is now the CEO of Omnicom digital joined the board and I said look we got to get a guy who's an ad heavy in here and jakubowski was previously the GM of microsoft adcenter and had a senior position at specific media and we brought him in and he's just been kickin butt our greek knowledge has really really made a significant significant contribution in the area of data and analytics for these major agencies and he was very able to bring in a crew of people know exactly how to run that business so you're a big fan of big data then mm-hmm oh yeah we just had a big special yesterday on Big Data mentioned about it so that's cool we're going to get into a lobbyist I was just kind of get the small talk out of the way here your current role is the founder of bullpen capital right so bullpen to me I'm a baseball not I love baseball bullpen means you go the bullpen for relief right yep thank God close the game out hopefully or mid-innings relief so tell us about what bullpen is it's a special fund as I know from reading talk to you to target an expansion of this new seed and explosive new funding environment Bryce plain force right I'll tell you how we got the name at the end too so here's what happened I've been investing with a lot of the so-called super angels and that's kind of a misnomer because they really are actually in some cases actual small venture firms to I've been investing with a lot of them since they got off the ground Josh Kopelman from first round is one of the first investors in aggregate knowledge mike maples was an early advisor to the company I've known Jeff claw be a who run soft tech since he was at Reuters and with the late 90s and so I've worked with these guys done a lot of investing and we were me and my buddies Duncan Davidson rich Melman were sitting around over summer of 09 doing a little bit data analysis right another big data assignment we realized that as more and more these seed funds got created they were creating an inventory of companies that weren't quite ready to go to the traditional venture guy but we're also difficult to bridge from just the seed guys because the see guys at that time didn't have really big funds so wait a minute you've got some really good companies here is to clarify the for the folks out there seed funds don't traditionally have follow-on big funds like a VC firm right that's what you're referring to yeah they tend not to have as bigger reserve so if a big fun writes you a five-million-dollar check and you stub your toe you can probably get some more money to get through the hardships but a lot of the the new super angel funds or smaller funds and you get a five hundred thousand dollar check and if you need another five hundred thousand dollars it can frequently be very difficult because they make so many investments with smaller reserves yeah and so you've got dave McClure clavey a maples first round capital true ventures made the first round truevision more traditional VC then say dave McClure and mike maples and claw VA they're out doing some really good work out their funding really good company spending a lot of time I know I've seen them working their butt off yeah they need some air support right they need some cover the little bullpen is that that's you come in and say hey for your stars they're going to rise up yep and so that's exactly right so what happens is here's what the analysis we did turned out of their portfolio thirty percent of their portfolios in aggregate quickly are really exciting companies you know and they quickly go up to a venture auction and the guys and sandhill rotor excited about it about twenty percent of their deals you know that they don't like too much it's kind of just floating there yeah that you know the entrepreneur wasn't a fit that team didn't execute that left fifty percent of their deals in the middle which they kind of were too early to tell as Mike maple sometimes says they were in an extended learning and discovery phase they hadn't quite figured out what their models yeah and this de pivoting stuff's going on right now the Marcus changes turbulence so these guys are right and so you look you look at some examples and you go well wait a minute for every zynga that goes up into the right immediately go look at the stories of chegg and modcloth and etsy and quite frankly the in-between round on twitter and for everyone Zynga that you find that just hits it out of the park the right way there were four to five companies that went through that hard intermediate round that it was difficult in the environment where you have only a potentially thinly capitalized seed fund in front of you go get through that difficult point I said guys you need a bull pen and way we came up with the name is I'm involved in a deal with Chad Durbin who used to pitch for the Phillies and now as a relief pitcher for the cleveland indians and he was in our office and we were talking about this idea and Chad said yeah it's kind of like you're building a bullpen for the seed guys I'm like that's exactly right that's the name we got to go with and so fortunately I was involved in in this company called showcase you which is actually cool cited suppose for recruiting for college scholarships for a collegiate athletes right you're a high school student you throw 80 miles an hour left hand it and you're in 10th grade how do you figure out where the right scholarships are so Durbin and some of the Phillies where the original investors in this company called showcase you it's actually a cool company as the combine work out online basically fries for the high school kids and because the high school kids sometimes are in tough geographies to get to you're in you're in a small rural area in Nebraska how do they find out that you're the guy who can throw 89 miles an hour great so I mean this VC market so basically you're referring to with bullpen right now is an innie and you've been in our sprayer so you live through classic you know classic financing your last company financed by kleiner perkins and a tribe i forget who financed tribe yet Mayfield was the lead investor may feel again another traditional VC firm all tier 1 VCS although may feel people are you now is slipped a little bit that's some of their key partners who have slipped away but they've all moved on what you're really referring to is there's a new dynamic of entrepreneurship going on now we're now there are some break outcomes that just need a little bit more time to mature in the old model they just be kind of closed down the VC guy would be on the Bora has just a pain in the ass and you know really not growing and do another round it's they get kind of lazy in a way if they got 10 10 boards are on so with the super angels and the fact that does take a lot of cash to start a company you've got more deals getting done so the the Y Combinator the Dave McClure's and chef claw va's in the mike maples and sometimes SiliconANGLE labs which we're doing here is telling you about right we're funding companies the more [ __ ] is funded a better will you come in as you keep them alive longer just wreck the pivot possibly that's right and so what happens is right now the venture industry is being disrupted the same way the venture industry has funded companies that have rupted other industries they are being disrupted in the exact same way and the disruption happened from below as always happens it started in seed stage now in order for the disruption to go all the way through there need to be companies that come after seed stage investors that have the same philosophy and mentality pro entrepreneur easy terms operating people who get their hands dirty to get deals done you need that in the B stage and in the sea stage and here's what our prediction is John our prediction is a few years from now there'll be a company that comes after bullpen that does series c and series d financing or mezzanine financing but the same philosophy is bullpen and then DST s at the end of that chain and you can imagine building companies that go all the way to liquidity that you got money from maples first bullpen second this unnamed company third and you went quasi-public with DST and you've bypassed the entire venture scheme entirely and the entire institutional public markets complete liquidity wealth creation companies creating jobs I mean this is new paradigm I mean this isn't amazing I mean this is a potentially amazing point in the history of us finance the idea that you could go two billion dollar outcomes by passing not only the public markets on the back side but the traditional venture ecosystem on the front side I mean that is a disruption if ever there was one amen I mean hi and with you a hundred percent the other some people who will argue regulation is if market forces first of all I'm a big believer in market forces so I think what you're doing is clearly identifying an opportunity that dynamics are all lying lining up entrepreneurs are validating it and so but the questions are regulations I mean first of all I'm anti-regulation but as you start to get to that liquidity and some are arguing I even wrote a blog post about saying hey you know basically Facebook's public merry go buddy what do you say to those guys this is the change in the history of this financial asustor we want the government regulating this yeah so my co-founder of both i started bullpen with two really good guys Duncan Davison who was the founder covad was advantage point for years asking them to buy government regulation would go bad i mean what happened then because of the I lack warsi like Wars but only that the some extent covet doesn't exist unless the telco 1994 happens through in some ways a creation of the government to good point it's social right but but think about it the arbitrariness of government as opposed to a well-thought-out centralized plan so anyway so Duncan sometimes uses that phrase you know he talks a lot about the way in which the government you know that the worst thing you can ever hear is I'm with the government I'm here to help right i mean that's about the way it goes but his point around the the the new quasi public markets is money we'll find a way yeah and when sarbanes-oxley happens and it's tough to go public and you're a CEO like Pincus who's running one of the great all-time companies in Silicon Valley at Zynga he says you know going public is not an entrance is not an exit it's an entrance that's that's this quote what why would I why do I need that headache I mean I was just talking with Charles beeler who sold for the hell dorado he sold to compel in one of his investments to dell for over a billion dollars and and 3 para nother firm he wasn't on that one that was sold to HP during storage wars he's talking about the lawsuits literally this shakedown of immediately filed lawsuits you know you could have got more money so this is this public markets brutal no doubt no doubt i think what you're doing is a revolution I'm all excited about this new environment again anything with his liquidity wealth creation with the engine of innovation can be powered that's fantastic look back the startups okay get back to where you're playing yeah the history of Silicon Valley was built on the notion of value add some have said over the past 10 years venture capital has not been truly value add and some were arguing value subtract and then just money so what you're talking about here is getting in and helping me stay alive what's the value added side of the equation mean I know that a lot of these folks like like like ourselves here it's looking angle McClure Xavier and maples and true ventures they roll their sleeves up first round capital right before we can only provide so much it kind of expands right you guys are filling in the capital market side right how are you guys helping out on the value add because a lot of those companies may be the next Twitter right you've got a bridge to finance that's right allow them to do the pivot or get the creative energy to grow and they hit that market if they hit that hit it going vertical you got it kind of sometimes nurture it you guys have a strategy for that talk about the so let me let me give you my perspective on that so I think 10 years ago when you're starting a company the name of the venture firm was more important than potentially the partner on your board ten years later the name of the firm matters much less and it's the name of the partner and it's the operating experience that that partner partner brought to bear and you go talk to the 24 year old entrepreneur verse the 34 year old entrepreneur the 24 entrepreneur 24 year old entrepreneur wants a guy like you or a guy like me on his board he wants have been there done that started a company was a CEO exited it got fired hired people fired other people scar tissue scars knowledge experience exactly and if a good friend of mine who's in the traditional business I'll leave his name out of it he sometimes says the following phrase the era of the gentleman VC is over and what he means by the era of the gentleman VC is over is you know if your background is you were a junior associate who came in with a finance degree in an MBA and it never started a company you're not going to get picked by the entrepreneur anymore in 10 years from now almost everyone in the business is going to have a resume that looks more like a Cristal Paul Martino a mark pincus that you name all the people who we've started our companies with if there's a lot more hochberg with track record certainly with with the kind of big companies in the valley just in our generation yet started with netscape google paypal right now i want to see facebook is and then now's inga either the ecosystem is just entered intertwined I mean for every failure that spawns more success right so that's right that's a Silicon Valley way yeah well a tribe was tribe was a perfect example of a successful failure tribe was not a successful outcome but it was in many ways a very successful way to actually pioneer what became social networking you know investments got made into Facebook as a result of that Zynga in aggregate knowledge were both the outcrops of what was learned to some extent the original business case of Zynga was remarkably simple there is a ton of time being spent on social networks and after you get done finding your buddies and looking at photos what do you do and Pincus is original vision to some extent was let's have games to play and that insight doesn't happen that way unless you don't do tribe and go into the trenches and get the scars on your back and your in your your second venture of our adventure right at the tribe was aggregate knowledge was similar concept people are connected I mean you got to be excited though I mean you know you were involved in tribes very early on all the stuff that you dealt with activity streams newsfeed connections the social science you know the one that one of the nicest pieces of validation of this recently was over in q4 of 2010 seven of the patents that me Chris law Elliot low and Brian Waller wrote got issued now they're all owned by Cisco Cisco bought tribe in the end they bought the assets in the and the patent filings but there are patent filings that go back to 2002 on the corner stones and hallmarks of what social networking really is that we wrote back then that have now issued order granted or sitting in the cisco portfolio and well that's kind of like a consolation prize and that there wasn't a big outcome for tribe it is very validating to see that those original claims on really cutting-edge stuff have been had been issued and I'm excited about that you should be proud i'm proud to know your great guy you have great integrity you're going to do well as a venture capitalist i think you people will trust you and you're fair and there's two types of people in this world people who help people people who screw people so you know you really on one side of the other you're you're not in between you're truly on the on the good side I really enjoy you know having chatting with you but let's talk about entrepreneurship from that perspective about patents you know I'm try was an outcome that we all can relate to the peplum with Facebook of what Zuckerberg and and those guys are doing over there that's entrepreneurship so talk to the entrepreneurs out there yeah hey you know what you do some good work it all comes back to you talk about the the Karma of entrepreneurship a failure is not a bad thing it's kind of a punch line these days I'll failures are stepping stone to the next thing but talk about your experience and lets you and i talk about how to deal with faith for those first-time entrepreneurs out there in their 20s what just give them a sense of how to approach their venture and if it fails or succeeds what advice would you give them yeah well like winning and losing is important part of the game I mean certain companies are going to be successful in certain ones art and if you go and start ten unsuccessful companies maybe this isn't exactly the business for you but that said how you the game is important as well and if you're a high integrity guy who gets good investors and you make quality decisions and let's say the market wasn't a fit you're going to get the money the second time because people said you know I work with that guy that guy really did a good job you know they never got it quite right but this is a guy learn the right lessons so when I'm coaching a first-time CEO and i'm the CEO coach of a couple guys now you know i'm looking for someone who's sitting there going hey i not only want to do this to win and be successful but i want to learn i I want to do this better than no one no one walks in and says I learn from my failure I hope I'm successful I mean you let it go and say hey I'm gonna be successful I want to win failure is not an option but failure happens right i mean you know it's bad breaks that mean but but here is the key less I tell this to all of the entrepreneurs I work with you will not be successful if you're making mistakes that were made by those before you if you make novel mistakes you're in good company right and so only ever make a novel mistake I made a good example this is one claw and I started Chris law and I started aggregate knowledge aggregate knowledge was the original business model was around recommendations and there were dead bodies in front of us there was net perceptions there was fire fly and she was in the office this morning with Yazdi one of the founders of [ __ ] cast with it man yeah so predictive analytics residi what did we do we went out and we I flew out and met John riedle University of Minnesota who was the founder of net perceptions I dug up yes d i got these guys on my advisory board and while aggregate knowledge was not successful in the recommendation business and pivoted into the data management thing we made novel mistakes we did not repeat the mistakes of met perceptions and firefly and so i think that's an important important lesson to an entrepreneur if you're going into an area that has dead bodies in front of you you better research them you better know who they are you better know what happened and you better make sure that if you screw it up you at least screw it up in a way which none of us could have predicted yeah that's the only way you're going to get a hall pass on that well let's talk about talk about some of the hot Renisha of activity saw so you're in that sector where you're feeding the seed the super angels in the first rounds early stage guys and it's a good fit what about some of the philosophies on like the firms out there there's of this to this two philosophies I just taught us to an entrepreneur here you met on the way out a street speaker text and there at seven you know under a million dollars in financing hmm series a yeah and then you got in the news yesterday color 41 million dollars building to win magnin flipboard a hundred million dollars i got this is these guys that we know i mean there are yep our generation and a little bit around the same time and certainly they have pedigree so remember the old days the arms race mentality right when the sector at all costs right that's kind of what's going on here i mean some of the command that kind of money there's actually an auction going on what do you make of that I mean bubble is an arms race so so rich Melman inside a bullpen de tu fascinating analysis he looked at the full portfolio of 28 took about 20 of the best super angels by the way the super angles are all different some are micro vc summer buying options etc so so first off super angel is a weird word but it's everybody from Union Square and foundry on one side first round and flooding but any take the top 20 or so of these guys and look at their portfolios what's amazing about their portfolios is the unlike 10 and 20 years ago in prior tech bubbles there are not 20 companies doing the same thing when you categorize them yeah ten percent are in ad tech ten percent our direct-to-consumer consider but like forty percent are one-offs that is this is I think one of the first times in the history of venture that forty percent of the deal flow is a one-off unique business idea that there aren't 30 guys going to do and I think that the importance of that to what happens in this next stage of the tech boom we don't know what that means yet because back in the day well we need to just we're venture firm we need to disk drive company okay so your venture firm you've got your disk drive companies and I'll 20 venture friend knows if drive out and created the herd mentality everyone talks about with venture yep mean I was an opponent on a talk on here in the cube and I don't think I actually put in a blog post but I called the era of entrepreneurship like with open sores and low cost of entry with cloud computing and now mobility the manure of innovation where you know in the manure that's being out in the mark place mushrooms are growing out of it right and these you don't know what's going to be all look the same in a way so how do you tell the good ones from the bad ones so it's hard right so you have a lot of one you have a lot more activity hence angel list hence the super in rice so so the economics and the deal flow are all there the question is how do you get them from being just a one-off looked good on paper flame out the reality yeah well look in my opinion seed stage investing is about investing in people and I think when big firms trying to seed stage investing there's an impedance mismatch a lot of times because they want more evidence they want to know did the market work to the management then this is this is an early stage venture and am I going to want to go in a foxhole with this person and in many ways the good super angels are instinctive investors who are betting on people that they want to be in the foxhole with and yeah did they do it before do they know how to hire people is the market reasonably interesting but guess what they're probably gonna pivot three times so wait a minute at the end of the day you got to invest in people later stage venture is not you can look at discounted cash flows you can look at mezzanine financing you can do traditional measures but if you're going to invest in two people who have a prototype and need five hundred thousand dollars you're investing in people at that point what do you think about the OC angel is I'm a big fan of and recently was added thanks to maybe out there but even though i'm not i don't really co-invest with anyone else other than myself maybe you guys would bullpen but but if that's a phenomenon you don't have angel list which is opening up doors for deal flow companies are getting funded navales getting yeah a ton of activity nivea doing great job with venture hacks i get y combinator which I called the community college of startups they bring in like they open the door and I mean that an actually good way don't mean that negatively I mean they're giving access to entrepreneurs that never had access to the market right and now you have Paul Graham kind of giving the halo effect or thrown the holy water on certain stars and they get magically funded but yesterday at an event and they're they're packed right I've heard from VC saying I'm not invited because I didn't wasn't part of the original investment class so it seems that Y comma day is getting full yeah so do you see that you agree is there will be an over lo y combinator you know kind of like I've TED Conference has you know Ted they'll be you know y combinator Boston little franchises will be like barcamp for sure I mean look and look at techstars they franchise they'd I was over there with Dave Tisch in New York there's TechStars New York after those TechStars older in techstars seattle there is no doubt in my mind that right now there is an over investment in the seed stage meaning that there is a little bit of a seed bubble going on that's not necessarily bad though because in terms of raw dollars there's not a bubble yet Rory who's over at rafi it smells like a bubble it looks like a bubble but when you look at the mechanic when you look at the actual total dollars it's not a bubble rory who has a hinge recent Horowitz been said that that it's a boom not a bubble yeah so don't be confused it looks like bubbles and booms kind of look together the same right I actually I'm not quite sure I had the exact data right but here's the quick summary if you take a look at venture capital investment as a percent of GDP historically it's been something like point one percent of GDP in the bubble back in 99 it went to one percent something like it went 10x higher right now we're still at point one percent but since it's very much centered around the seed stage investing you see this frothiness in the sea but until that number goes from point 1 percent of GDP back up to one percent there's no real bubble because the tonnage of money hasn't come in yet and so so it's starting but this is what a tech boom feels like the early stages are excitement and lots of ideas and lots of flowers blooming and then the big money comes in because John I'll bet you're your brother and your sister and your mom haven't invested in a tech startup back in 99 video there's no public market that supports seven in a way that's a good and bad star basement yeah there's no fraud going on and most of the companies that are out there whether their lifestyle business or seed or bullpen funded are actually generating income the entrepreneur he has any earlier Mike was saying that he could a business deal so people are kind of like saw the old bubble and said shoot I don't want to do that again I gotta have at least revenue right and so companies didn't seem to start out with cash so you know that because you invested it but you know Pincus was getting some cash flow in the door from day one that's right that company was company was profitable the first day it started basically so talk about you know so I'm with Paul Martino by the way with bullpen capital entrepreneur wrote the patents on social networking which he sold the cisco when they sold the company now with bullpen capital huge dynamic you're a company out there this is exactly the positive dynamic you want to see because mainly you know dave mcclure jeff clavier mike maples have been kind of getting their butts handed to them in the press about super angels not having the juice to kind of go anywhere and it's been kind of a negative press there so you know this is the kind of void that's been filled by you guys to show the market that look at this there's a road map here so even though that the McClure's and clubs don't have big funds that there's a path to follow on financing so that the vc's can't shut them down and i've heard some pc say that so a lot of traditional venture guys would like to say that you know this little disruption we nipped it in the butt and it stopped after the seed stage but that's not the history of disruptions the history of disruptions are they start from the bottom then they get ecosystem support and then they grow and they disrupt the incumbents and I think we're halfway there so so the Angel gate thing that Arrington reported on was interesting because you know essentially what happened there it was a lot of him fighting Ron Conway I was not happy you can't be happy about competition I mean this is competition that increases prices right so you know in the short term prices have been inflated on valuations true or false that's true but but but I think I think the whole way angel gate was reported was absurd the most Pro entrepreneurial venture people perhaps in the history of the business are the guys who were supposedly at those tables I mean mike maples Jeff claw VA josh cop and Ron Conway fired his guy that was there I I understand suppose again suppose a key are right these are the most Pro entrepreneurial venture guys in the history of the business so I think that turned into something that it never was yeah well I mean that's the thing you know good for content producers who want page views I got to create some drama and you know as you know SiliconANGLE doesn't have any banner ads on our site quick plug for us we are motivated by content not page views so thanks for coming in today no but seriously I mean there's a there's a black cloud over the super angels has been since Angel gate I've heard privately from VCS that super angels it's been kind of a scuttlebutt they're misaligned just rumors I completely overblown and you know their business model threatens the incumbents and you know someone needed someone needed a piece of fodder to start a you know start a techcrunch discussion right there's no doubt that the market is need in need of a new ecosystem for the early stage because individual angels traditionally were wealthy individuals but now you have people with more experience like yourselves and entrepreneurs from google and facebook etc coming out and doing some things okay so next topic more on a personal kind of professional note k last final question is I know you got to run appreciate your time you're a technologist a lot of folks don't know that you're hardcore computer science guy and our model southern angles computer science meet social science right in your wheelhouse so with that just kind of final parting question what gets you excited technically right now I mean I'll see you have roots in both comps I and social Iran Zynga's early investor roster you got a bullpen capital you're looking at a lot of deals outside of that you as a computer scientist geek mm-hmm what gets you jazz what do you see in the horizon that's not yet on the mega trend roster that kind of you can't put your finger on it truly we might really get a good feeling well so I think you'll be disappointed with this answer because I think it's now cross the chasm to start being one of those mega trends it's called consumerization of enterprise and that's now the buzz word for it but what is it really mean and why do I think it's for real look you've got cool self-service applications for everything you can go do home banking by logging into a portal you can go to an ATM you can go do these things but you know go bring a new laptop into your big stodgy fortune 500 company and you know it's like getting a rectal exam right you know we got to install this we got to give you this private key yet that's TSA it writes like going through TSA exact idea that IT inside of big fortune 500 companies is going to stop being this gatekeeper to new technology I think look how long do you think it'll be until pick your favorite fortune 500 company the IT people know how to deal with the ipad 2 but how many people bought an ipad 2 into the off already everyone and so this to me is going to be the big next deck the next decade are going to be self service offerings for the enterprise getting around a very frustrating gatekeepers inside of you know the IT department etc and that's going to lead to an awesome boom of everything from security to auditing to compliance etc that's the convergence question Paul Martino my friend entrepreneur great guy venture capitals now on the good side helping the seed Super Angel micro VCS great to have you consumerization of IT that hits the cloud mobile social it's everything so that I was buzzword compliant on that great job great to have you know you're busy got to have you in again thanks so much for time that's a wrap thank you very much great thank you John

(upbeat music) >> Okay, we're back here at theCUBE on this floor in CLOUD CITY, the center of all the action at Mobile World Congress. I'm John Brown your host. Michael current CTO of Virta San is here with me remote because this is a virtual event as well, this is a hybrid event. The first industry hybrid event, Greg would be back in real life on the floor, Michael, you coming in remotely. Thanks for joining us here in the cube in cloud city. >> Thanks for having me and said the beer. >> We were just talking on camera about. He went to Michigan and football, all that good time while we were waiting from Adam to pseudo great stuff, but let's get into what you guys are doing. You've got a great cloud news, we're going to get to, but take a minute to explain what you guys do first. >> So Virtasant helps organizations of any size thrive in the cloud. So we have a unique combination of proprietary technologies, such as our cloud optimization platform that we'll talk about in a minute and a global team of experts that helps companies make the most of the cloud from getting to the cloud and building the cloud to optimizing the cloud all the way to managing the cloud at scale. >> Well, you got a lot of experience dealing with the enterprise, a lot of customer growth over the years, great leader. The cloud dynamic here is the big story at mobile world congress, this year, the change over, I won't say change over per se, but certainly the shift or growth of cloud on top of telco, you guys have some news here at mobile world congress. Let's share the news, what's the big scoop? >> So we have an automated cloud optimization platform that helps companies automatically understand your usage patterns and do spend fully, automatically. And we focus first on AWS is the biggest cloud provider, but starting this week, we wanted announces we're actually going live with our GCP product, which means people who are on the GCP cloud platform can now leverage our platform to constantly understand usage patterns and spend and automatically take action to reduce spend. So we typically see customers save over 50% when they use our platform. So now GCP customers can take advantage of the same capabilities that our AWS customers take advantage of every day. >> Talk about the relationships as you get deeper. And this seems to be the pattern I want to just unpack it. You don't mind a little bit the relationship with Google and this announcement and Amazon you're tightly coupled with them, is it more integration? Talk about what makes these deals different and special for your customers? What's what's, what's about them. What's the big deal? >> Well, I think for us, obviously we think that, you know, the public cloud's the future, right? And obviously cloud city and all the different companies there agree with us, and we think that much like, you know, you don't, you don't generate your own electricity. We don't think you're going to generate you're to you're going to build your own technology infrastructure. For the most part, we think that pretty much all compute will be in the public cloud. And obviously AWS is the market leader in the largest cloud provider in the, but you know, GCP, especially with telecom has some compelling offerings. And we think that, you know, organizations are going to want choice. Many will go multicloud, meaning they'll have 1, 2, 3 of the big providers and move workloads across those. But even those who choose one cloud provider, you know, each cloud provider has their strengths and different companies will choose different providers. And they're all, you know, they've all got strong capabilities and their uniqueness. So we want to make sure that whether, you know, an organization goes across all cloud providers or they choose one that we can support them no matter what the workloads look like, and so for us, you know, developing deep relationships with each of the public cloud providers, but also, you know, expanding our full set of capabilities to support all of them is critically important because we do think that there's going to be, you know, a handful of large public cloud providers and obviously AWS and GCP are among them. >> Yeah, I mean, I talk to people all the time and even, you know, we're an Amazon customer, pretty robust cloud in the bills out of control is what's, what's this charge for it. There's more services to tap into, you know, it's like first one's on me, you know? And then next thing you know, you're, you're consuming a hell of a lot of new services, but there's value there and there's breaths a minute for the cloud, we all love that. But just as a random aside here, I want to get your thoughts real quick, if you don't mind, this idea of a cloud economist has become part of a new role in an organization, certainly SRS is DevOps. Then you starting to get into people who actually can squint through the data and understand the consumption and be more on the economics side, because people are changing how they report their earnings. They're changing how they report their KPIs based upon the usage and costs, and... What, is this real? what's your thoughts on that? I know that's a little random, but I want to get your, get your thoughts on that. >> Well, yeah, it's interesting that that's been a development. What I will say is, you know, the economics of cloud are complicated and they're still changing and still emerging, so I think that's probably more of a reaction to how dynamic the environment is then kind of a long-term trend. I mean, admittedly for us we hope that, you know, a lot of that analysis and the data that's required and will be provided by our platform. So you can think about it as, you know, a digital or AI powered cloud economist. So I don't, I don't know, hopefully our customers can use the platform and get everything they need and they won't need to go out and hire a cloud economist. That sounds expensive. >> Well, I think one of the things that sounds like great opportunities to make that go away, where you don't have to waste a resource to go through the cost side. I want to get your thoughts on this. This comes up all the time, certainly on Twitter, I'm always riffing on it. It comes up on a lot of my interviews and private chats with people about their, their cloud architecture, spend can get out of control pretty quickly. And data is a big part of it. Moving data is always going to be... Especially Amazon and Google, moving data in and out of the cloud is great. Now with the edge, I just talked to Bill Vass at a Amazon web service. He's the VP of engineering. You can literally bring the cloud to the edge and all the clouds are going to be doing this, these edge hubs. So that's going to process data at the edge, but it's also going to open up more services, right? So, you know, it's complicated enough as it is, spend is getting out of control. And it's only seems to be getting out of control even more. How do you talk to customers? I'd want to not be afraid they want to jump in, but they also want to have a hedge. Yeah, what's your, what's your take on your story? >> I think there's a lot of debate right now as to whether or not, you know, moving to the cloud from a cost perspective is cost-effective or more costly. And there's a pretty healthy debate going on at the moment. I think that the reality is, you know, yes, the cloud makes it easier for you to take on new services and bring on new things, and that of course drives spend, but it also unlocks incredible possibilities. What we try to do is help organizations take advantage of those possibilities and kind of the capabilities of the cloud while managing spend, and it's a complex problem, but it's a solvable problem. So for us, we think that, you know the job of the cloud providers is to, you know, continue to innovate and continue to bring more and more capability to bear so that organizations can transform through technology, the job of the teams using that technologies is to really leverage those capabilities, to build and to innovate and to serve their customers. And what we want to do is enable them to do that in a cost-effective manner, and we believe, and we have data to prove that if you do public cloud, right, it's cheaper because you know, those, those organizations, you know, much like, you know, at the turn of the industrial revolution, factories used to have their own power plants because you couldn't effectively reliably and kind of cost-effectively generate power at scale. Obviously no one does that now. And I think with the cloud providers, that's the same thing. I mean, they're investing in proprietary hardware, tons of software, tons of automation. They're highly secure. You know, at the end of the day, they're going to always be able to provide a given capability at a lower cost point. Like, of course they need to make profit. So there's a bit of margin in there, but, you know, at the end of the day, we think that both the flexibility and capability of it combined with their ability to operate at scale gives you a better value proposition, especially if you do it right. And that's what we want to focus on is, you know, the answer is there. You just need the right data and the right intelligence to find it. >> Totally, I totally agree with you. In fact, I had a big debate with Martine Casada at Andreessen Horowitz about cloud repatriation, and he was calling his paradigm. Do you focus on the cost or the revenue? And obviously they have Dropbox, which is a big example of that, and I even interviewed the Zynga guys and they actually went back to Amazon, although they didn't report that, but I'm a big believer that if you can't get the new revenue, then you're in cosmos then, and there are the issues, but again, I don't want to go there right now. I'll talk about that another time, but I want to get your, I want to get the playbook, so first of all, I love what you do, I think it's an opportunity to take that heavy lifting away from customers around understanding cost optimization. A lot of people don't know how to do it. So take us through a playbook. What are some best practices that you guys have seen to help people figure this out? What do you say to somebody, help me, Michael, I'm in a world of hurt, what do I do? What's the playbook? Can you give some examples of day in the life? >> Sure, so I think, I think the first thing is know what you're spending money on which sounds obvious, but you know, there's cloud environments are complicated, especially at scale. There's hundreds of thousands of skews and lots of different usage patterns. And I think the first thing is understand what you're spending money on. Number two is understand what you're getting for that spend. So, you know, what value are you driving with that spend? And then number three is put the information in the hands of the people who can do something about it. And I think that is, is one of the things that we really focus on is, you know, we built our product from an engineering focus first. It was engineers solving the problem of understanding how to keep cloud costs in control. And so our whole principle is give the people, working with the technology, the data to make good decisions and give them the power to act on it. And so, you know, a lot of companies say, "Oh, we're spending more over here. Or maybe we should look at that." But, but what we believe is actually be specific, where are you spending money? Where exactly are you spending too much? And what should you do about that? And give that information to the people who can take action, which are the engineers. And then lastly make it important in the organization because there's a ton of competing priorities. And what we've found is that, you know, where there's leadership support there's results. And so I think if you do those four things, you know, results will follow. Now, obviously, you know, you need to understand specific utilization patterns and know what to do with different kinds of resources and all of that stuff is complicated, but there are certainly solutions out there. Ours included who helped you with that. So if you get the other four things, right, plus you have some help, you can keep it under control and actually not just keep it under control, but operate in an environment that's much cheaper than hosting all this technology yourself and much more flexible. >> That's a great point, I mean, the fact that you mentioned earlier, the engineering piece that is so true people I've talked to, you mean our experiences and it's pretty common. The DevOps team tends to get involved in things like making sure you're buying reserve instances or all kinds of ways to optimize patterns, and that's also an issue, right? I mean, first of all, it makes sense that they're doing it, but also engineering time is being spent on essentially accounting at that point. Demonstrates the shift, I'm not saying it's good or bad. I'm just saying that got to be realistic. It's a time sink for the engineering when they're not engineering accounting, or should they, this is a legit question, it's not so much they should or shouldn't, I mean, if you say to someone, "Hey, you're paid to build and write software and you're spending your time solving accounting problems." That's obviously a mismatch. But when you talk about SREs and DevOps, Michael, it's kind of what might not be a bad thing, right? I mean, so how do people react to that? Are they kind of scratching their head on the same way? Or are you guys the solution to that? >> Well, I think that at first they are, but for us, at least it's, you know, we don't want them trying to understand the intricacies of a savings plan or understanding kind of the different options for compute instances. What we want them to do is we give them all the information. So our approach is give them all the information. They need to quickly make a decision, let them make a decision, like push a button and then let the change happen automatically. So if you think about it, you know, the amount of time they spend is, is a minute. That's the goal because then we can use their expertise. So it's not a finance person or an accountant doing research and making decisions that may or may not make technical sense and then looping in a bunch of people and they all talk, and then all that, that kind of whole process it's now here is a data-driven observation and recommendation. You have context to say yes or no, if you push the button and then you say, yes, then, you know, the change happens. If you say, no, the system learns. >> It's building right into the pipeline and they're shifting left to security, it's the same concept. It's really a great thing. I really think you're onto something big.,I love this story. It's kind of one of those things where reality's there. Michael, we've got 30 seconds left. I want to get your thoughts to share what put a plug in for the company, what you guys are doing, what are you looking at higher? You got a 30 second plug, go plug the company, what do you got? >> Well, you know, we think that, you know, for any organization, big or small, trying to make the most of the public cloud and be cloud first, you know, we, we bring a unique set of expertise, automation, and technology capabilities to bear, to help them thrive in the cloud and make the most of it. So, you know, obviously we would love to work with any company that, that wants to be cloud first and fully embrace the public cloud. I think we've got all the tools to help them thrive. >> Yeah, and I think, I think the confluence of business logic technology engineering working together is a home run. It's only going to get more stronger, so congratulations. Thanks for coming on theCUBE. >> Thank you. >> Adam, back to you in the studio for more action, theCUBE is out, we'll see you later.

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hello everyone, and welcome to this CUBE Conversation. You know, theCUBE has been following the trends in the so-called big data space since 2010. And one of the things that we reported on for a number of years is the complexity involved in wrangling and making sense out of data. The allure of this idea of no schema on write and very low cost platforms like Hadoop became a data magnet. And for years, organizations would shove data into a data lake. And of course the joke was it was became a data swamp. And organizations really struggled to realize the promised return on their big data investments. Now, while the cloud certainly simplified infrastructure deployment, it really introduced a much more complex data environment and data pipeline, with dozens of APIs and a mind-boggling array of services that required highly skilled data engineers to properly ingest, shape, and prepare that data, so that it could be turned into insights. This became a real time suck for data pros, who spent 70 to 80% of their time wrestling data. A number of people saw the opportunity to solve this problem and automate the heavy lift of data, and simplify the process to adjust, synchronize, transform, and really prepare data for analysis. And one of the companies that is attacking this challenge is InfoWorks. And with me to talk about the evolving data landscape is Buno Pati, CEO of InfoWorks. Buno, great to see you, thanks for coming in. >> Well thank you Dave, thanks for having me here. >> You're welcome. I love that you're in Palo Alto, you come to MetroWest in Boston to see us (Buno laughs), that's great. Well welcome. So, you heard my narrative. We're 10 years plus into this big data theme and meme. What did we learn, what are some of the failures and successes that we can now build on, from your point of view? >> All right, so Dave, I'm going to start from the top, with why big data, all right? I think this big data movement really started with the realization by companies that they need to transform their customer experience and their operations, in order to compete effectively in this increasingly digital world, right? And in that context, they also realized very quickly that data was the key asset on which this transformation would be built. So given that, you look at this and say, "What is digital transformation really about?" It is about competing with digital disruption, or fending off digital disruption. And this has become, over time, an existential imperative. You cannot survive and be relevant in this world without leveraging data to compete with others who would otherwise disrupt your business. >> You know, let's stay on that for a minute, because when we started the whole big data, covering that big data space, you didn't really hear about digital transformation. That's sort of a more recent trend. So I got to ask you, what's the difference between a business and a digital business, in your view? >> That is the foundational question behind big data. So if you look at a digital native, there are many of them that you can name. These companies start by building a foundational platform on which they build their analytics and data programs. It gives them a tremendous amount of agility and the right framework within which to build a data-first strategy. A data-first strategy where business information is persistently collected and used at every level of the organization. Furthermore, they take this and they automate this process. Because if you want to collect all your data and leverage it at every part of the business, it needs to be a highly automated system, and it needs to be able to seamlessly traverse on-premise, cloud, hybrid, and multi-cloud environments. Now, let's look at a traditional business. In a traditional enterprise, there is no foundational platform. There are things like point tools for ETL, and data integration, and you can name a whole slew of other things, that need to be stitched together and somehow made to work to deliver data to the applications that consume. The strategy is not a data-first strategy. It is use case by use case. When there is a use case, people go and find the data, they gather the data, they transform that data, and eventually feed an application. A process that can take months to years, depending on the complexity of the project that they're trying. And they don't automate this. This is heavily dependent, as you pointed out, on engineering talent, highly skilled engineering talent that is scarce. And they have not seamlessly traversed the various clouds and on-premise environments, but rather fragmented those environments, where individual teams are focused on a single environment, building different applications, using different tools, and different infrastructure. >> So you're saying the digital native company puts data at the core. They organize around that data, as opposed to maybe around a bottling plant, or around people. And then they leverage that data for competitive advantage through a platform that's kind of table stakes. And then obviously there's cultural aspects and other skills that they need to develop, right? >> Yeah, they have an ability which traditional enterprises don't. Because of this choice of a data-first strategy with a foundational platform, they have the ability to rapidly launch analytics use cases and iterate all them. That is not possible in a traditional or legacy environment. >> So their speed to market and time to value is going to be much better than their competition. This gets into the risk of disruption. Sometimes we talk about cloud native and cloud naive. You could talk about digital native and digital naive. So it's hard for incumbents to fend off the disrupters, and then ultimately become disrupters themselves. But what are you seeing in terms of some of the trends where organizations are having success there? >> One of the key trends that we're seeing, or key attributes of companies that are seeing a lot of success, is when they have organized themselves around their data. Now, what do I mean by that? This is usually a high-level mandate coming down from the top of the company, where they're forming centralized groups to manage the data and make it available for the rest of the organization to use. There are a variety of names that are being used for this. People are calling it their data fabric. They're calling it data as a service, which is pretty descriptive of what it ends up being. And those are terms that are all sort of representing the same concept of a centralized environment and, ideally, a highly automated environment that serves the rest of the business with data. And the goal, ultimately, is to get any data at any time for any application. >> So, let's talk a little bit about the cloud. I mentioned up front that the cloud really simplified infrastructure deployment, but it really didn't solve this problem of, we talked about in terms of data wrangling. So, why didn't it solve that problem? And you got companies like Amazon and Google and Microsoft, who are very adept at data. They're some of these data-first companies. Why is it that the cloud sort of in and of itself has not been able to solve this problem? >> Okay, so when you say solve this problem, it sort of begs the question, what's the goal, right? And if I were to very simply state the goal, I would call it analytics agility. It is gaining agility with analytics. Companies are going from a traditional world, where they had to generate a handful of BI and other reporting type of dashboards in a year, to where they literally need to generate thousands of these things in a year, to run the business and compete with digital disruption. So agility is the goal. >> But wait, the cloud is all about agility, is it not? >> It is, when you talk about agility of compute and storage infrastructure. So, there are three layers to this problem. The first is, what is the compute and storage infrastructure? The cloud is wonderful in that sense. It gives you the ability to rapidly add new infrastructure and spin it down when it's not in use. That is a huge blessing, when you compare it to the six to nine months, or perhaps even longer, that it takes companies to order, install, and test hardware on premise, and then find that it's only partially used. The next layer on that is what is the operating system on which my data and analytics are going to be run? This is where Hadoop comes in. Now, Hadoop is inherently complex, but operating systems are complex things. And Spark falls in that category. Databricks has taken some of the complexity out of running Spark because of their sort of manage service type of offering. But there's still a missing layer, which leverages that infrastructure and that operating system to deliver this agility where users can access data that they need anywhere in the organization, without intensely deep knowledge of what that infrastructure is and what that operating system is doing underneath. >> So, in my up front narrative, I talked about the data pipeline a little bit. But I'm inferring from your comments on platform that it's more than just this sort of narrow data pipeline. There's a macro here. I wonder if you could talk about that a little bit. >> Yeah. So, the data pipeline is one piece of the puzzle. What needs to happen? Data needs to be ingested. It needs to be brought into these environments. It has to be kept fresh, because the source data is persistently changing. It needs to be organized and cataloged, so that people know what's there. And from there, pipelines can be created that ultimately generate data in a form that's consumable by the application. But even surrounding that, you need to be able to orchestrate all of this. Typical enterprise is a multi-cloud enterprise. 80% of all enterprises have more than one cloud that they're working on, and on-premise. So if you can't orchestrate all of this activity in the pipelines, and the data across these various environments, that's not a complete solution either. There's certainly no agility in that. Then there's governance, security, lineage. All of this has to be managed. It's not simply creation of the pipeline, but all these surrounding things that need to happen in order for analytics to run at-scale within enterprises. >> So the cloud sort of solved that layer one problem. And you certainly saw this in the, not early days, but sort of mid-days of Hadoop, where the cloud really became the place where people wanted to do a lot of their Hadoop workloads. And it was kind of ironic that guys like Hortonworks, and Cloudera and MapR really didn't have a strong cloud play. But now, it's sort of flipping back where, as you point out, everybody's multi-cloud. So you have to include a lot of these on-prem systems, whether it's your Oracle database or your ETL systems or your existing data warehouse, those are data feeds into the cloud, or the digital incumbent who wants to be a digital native. They can't just throw all that stuff away, right? So you're seeing an equilibrium there. >> An equilibrium between ... ? >> Yeah, between sort of what's in the cloud and what's on-prem. Let me ask it this way: If the cloud is not a panacea, is there an approach that does really solve the problem of different datasets, the need to ingest them from different clouds, on-prem, and bring them into a platform that can be analyzed and drive insights for an organization? >> Yeah, so I'm going to stay away from the word panacea, because I don't think there ever is really a panacea to any problem. >> That's good, that means we got a good roadmap for our business then. (both laugh) >> However, there is a solution. And the solution has to be guided by three principles. Number one, automation. If you do not automate, the dependence on skill talent is never going to go away. And that talent, as we all know, is very very scarce and hard to come by. The second thing is integration. So, what's different now? All of these capabilities that we just talked about, whether it's things like ETL, or cataloging, or ingesting, or keeping data fresh, or creating pipelines, all of this needs to be integrated together as a single solution. And that's been missing. Most of what we've seen is point tools. And the third is absolutely critical. For things to work in multi-cloud and hybrid environments, you need to introduce a layer of abstraction between the complexity of the underlying systems and the user of those systems. And the way to think about this, Dave, is to think about it much like a compiler. What does a compiler do, right? You don't have to worry about what Intel processor is underneath, what version of your operating system you're running on, what memory is in the system. Ultimately, you might-- >> As much as we love assembly code. >> As much as we love assembly code. Now, so take the analogy a little bit further, there was a time when we wrote assembly code because there was no compiler. So somebody had to sit back and say, "Hey, wouldn't it be nice if we abstracted away from this?" (both laugh) >> Okay, so this sort of sets up my next question, which is, is this why you guys started InfoWorks? Maybe you could talk a little bit about your why, and kind of where you fit. >> So, let me give you the history of InfoWorks. Because the vision of InfoWorks, believe it or not, came out of a rear view mirror. Looking backwards, not forwards. And then predicting the future in a different manner. So, Amar Arsikere is the founder of InfoWorks. And when I met him, he had just left Zynga, where he was the general manager of their gaming platform. What he told me was very very simple. He said he had been at Google at a time when Google was moving off of the legacy systems of, I believe it was Netezza, and Oracle, and a variety of things. And they had just created Bigtable, and they wanted to move and create a data warehouse on Bigtable. So he was given that job. And he led that team. And that, as you might imagine, was this massive project that required a high degree of automation to make it all come together. And he built that, and then he built a very similar system at Zynga, when he was there. These foundational platforms, going back to what I was talking about before digital days. When I met him, he said, "Look, looking back, "Google may have been the only company "that needed such a platform. "But looking forward, "I believe that everyone's going to need one." And that has, you know, absolute truth in it, and that's what we're seeing today. Where, after going through this exercise of trying to write machine code, or assembly code, or whatever we'd like to call it, down at the detailed, complex level of an operating system or infrastructure, people have realized, "Hey, I need something much more holistic. "I need to look at this from a enterprise-wide perspective. "And I need to eliminate all of this dependence on," kind of like the cloud plays a role because it eliminates some of the dependence, or the bottlenecks around hardware and infrastructure. "And ultimately gain a lot more agility "than I'm able to do with legacy methodology." So you were asking early on, what are the lessons learned from that first 10 years? And lot of technology goes through these types of cycles of hype and disillusionment, and we all know the curve. I think there are two key lessons. One is, just having a place to land your data doesn't solve your problem. That's the beginning of your problems. And the second is that legacy methodologies do not transfer into the future. You have to think differently. And looking to the digital natives as guides for how to think, when you're trying to compete with them is a wonderful perspective to take. >> But those legacy technologies, if you're an incumbent, you can't just rip 'em and throw 'em out and convert. You going to use them as feeders to your digital platform. So, presumably, you guys have products. You call this space Enterprise Data Ops and Orchestration, EDO2. Presumably you have products and a portfolio to support those higher layer challenges that we talked about, right? >> Yeah, so that's a really important question. No, you don't rip and replace stuff. These enterprises have been built over years of acquisitions and business systems. These are layers, one on top of another. So think about the introduction of ERP. By the way, ERP is a good analogy of to what happened, because those were point tools that were eventually combined into a single system called ERP. Well, these are point capabilities that are being combined into a single system for EDO2, or Enterprise Data Operations and Orchestration. The old systems do not go away. And we are seeing some companies wanting to move some of their workloads from old systems to new systems. But that's not the major trend. The major trend is that new things that get done, the things that give you holistic views of the company, and then analytics based on that holistic view, are all being done on the new platforms. So it's a layer on top. It's not a rip and replace of the layers underneath. What's in place stays in place. But for the layer on top, you need to think differently. You cannot use all the legacy methodologies and just say that's going to apply to the new platform or new system. >> Okay, so how do you engage with customers? Take a customer who's got, you know, on-prem, they've got legacy infrastructure, they don't want to get disrupted. They want to be a digital native. How do you help them? You know, what do I buy from you? >> Yeah, so our product is called DataFoundry. It is a EDO2 system. It is built on the three principles, founding principles, that I mentioned earlier. It is highly automated. It is integrated in all the capabilities that surround pipelines, perhaps. And ultimately, it's also abstracting. So we're able to very easily traverse one cloud to another, or on-premise to the cloud, or even back. There are some customers that are moving some workloads back from the cloud. Now, what's the benefit here? Well first of all, we lay down the foundation for digital transformation. And we enable these companies to consolidate and organize their data in these complex hybrid, cloud, multi-cloud environments. And then generate analytics use cases 10x faster with about tenth of the resource. And I'm happy to give you some examples on how that works. >> Please do. I mean, maybe you could share some customer examples? >> Yeah, absolutely. So, let me talk about Macy's. >> Okay. >> Macy's is a customer of ours. They've been a customer for about, I think about 14 months at this point in time. And they had built a number of systems to run their analytics, but then recognized what we're seeing other companies recognize. And that is, there's a lot of complexity there. And building it isn't the end game. Maintaining it is the real challenge, right? So even if you have a lot of talent available to you, maintaining what you built is a real challenge. So they came to us. And within a period of 12 months, I'll just give you some numbers that are just mind-blowing. They are currently running 165,000 jobs a month. Now, what's a job? A job is a ingestion job, or a synchronization job, or a transformation. They have launched 431 use cases over a period of 12 months. And you know what? They're just ramping. They will get to thousands. >> Scale. >> Yeah, scale. And they have ingested a lot of data, brought in a lot of DataSources. So to do that in a period of 12 months is unheard of. It does not happen. Why is it important for them? So what problem are they trying to solve? They're a retailer. They are being digitally disruptive like (chuckles) no one else. >> They have an Amazon war room-- >> Right. >> No doubt. >> And they have had to build themselves out as a omni-channel retailer now. They are online, they are also with brick and mortar stores. So you take a look at this. And the key to competing with digital disrupters is the customer experience. What is that experience? You're online, how does that meld with your in-store experience? What happens if I buy online and return something in a store? How does all this come together into a single unified experience for the consumer? And that's what they're chasing. So that was the first application that they came to us with. They said, "Look, let us go into a customer 360. "Let us understand the entirety "of that customer's interaction "and touchpoints with our business. "And having done so, we are in a position "to deliver a better experience." >> Now that's a data problem. I mean, different DataSources, and trying to understand 360, I mean, you got data all over the place. >> All over the place. (speaking simultaneously) And there's historical data, there's stuff coming in from, you know, what's online, what's in the store. And then they progress from there. I mean, they're not restricting it to customer experience and selling. They're looking at merchandising, and inventory, and fulfillment, and store operations. Simple problem. You order something online, where do I pull this from? A store or a warehouse? >> So this is, you know, big data 2.0, just to use a sort of silly term. But it's really taking advantage of all the investment. I've often said, you know, Hadoop, for all the criticism it gets, it did lower our cost of getting data into, you know, at least one virtual place. And it got us thinking about how to get insights out of data. And so, what you're describing is the ability to operationalize your data initiatives at scale. >> Yeah, you can absolutely get your insights off of Hadoop. And I know people have different opinions of Hadoop, given their experience. But what they don't have, what these customers have not achieved yet, most of them, is that agility, right? So, how easily can you get your insights off of Hadoop? Do I need to hire a boatload of consultants who are going to write code for me, and shovel data in, and create these pipelines, and so forth? Or can I do this with a click of a button, right? And that's the difference. That is truly the difference. The level of automation that you need, and the level of abstraction that you need, away from this complexity, has not been delivered. >> We did, in, it must have been 2011, I think, the very first big data market study from anybody in the world, and put it out on, you know, Wikibon, free research. And one of the findings was (chuckles) this is a huge services business. I mean, the professional service is where all the money was going to flow because it was so complicated. And that's kind of exactly what happened. But now we're entering, really it seems like a phase where you can scale, and operationalize, and really simplify, and really focus your attention on driving business value, versus making stuff work. >> You are absolutely correct. So I'll give you the numbers. 55% of this industry is services. About 30% is software, and the rest is hardware. Break it down that way. 55%. So what's going on? People will buy a big data system. Call it Hadoop, it could be something in the cloud, it could be Databricks. And then, this is welcome to the world of SIs. Because at this point, you need these SIs to write code and perform these services in order to get any kind of value out of that. And look, we have some dismal numbers that we're staring at. According to Gardner, only 17% of those who have invested in Hadoop have anything in production. This is after how many years? And you look at surveys from, well, pick your favorite. They all look the same. People have not been able to get the value out of this, because it is too hard. It is too complex and you need too many consultants (laughs) delivering services for you to make this happen. >> Well, what I like about your story, Buno, is you're not, I mean, a lot of the data companies have pivoted to AI. Sort of like, we have a joke, ya know, same wine, new bottle. But you're not talking about, I mean sure, machine intelligence, I'm sure, fits in here, but you're talking about really taking advantage of the investments that you've made in the last decade and helping incumbents become digital natives. That sounds like it's at least a part of your mission here. >> Not become digital natives, but rather compete with them. >> Yeah, right, right. >> Effectively, right? >> Yep, okay. >> So, yeah, that is absolutely what needs to get done. So let me talk for a moment about AI, all right? Way back when, there was another wave of AI in the late 80s. I was part of that, I was doing my PhD at the time. And that obviously went nowhere, because we didn't have any data, we didn't have enough compute power or connectivity. Pretty inert. So here it is again. Very little has changed. Except for we do have the data, we have the connectivity, and we have the compute power. But do we really? So what's AI without the data? Just A, right? There's nothing there. So what's missing, even for AI and ML to be, and I believe these are going to be powerful game changers. But for them to be effective, you need to provide data to it, and you need to be able to do so in a very agile way, so that you can iterate on ideas. No one knows exactly what AI solution is going to solve your problem or enhance your business. This is a process of experimentation. This is what a company like Google can do extraordinarily well, because of this foundational platform. They have this agility to keep iterating, and experimenting, and trying ideas. Because without trying them, you will not discover what works best. >> Yeah, I mean, for 50 years, this industry has marched to the cadence of Moore's Law, and that really was the engine of innovation. And today, it's about data, applying machine intelligence to that data. And the cloud brings, as you point out, agility and scale. That's kind of the new cocktail for innovation, isn't it? >> The cloud brings agility and scale to the infrastructure. >> In low risk, as you said, right? >> Yeah. >> Experimentation, fail fast, et cetera. >> But without an EDO2 type of system, that gives you a great degree of automation, you could spend six months to run one experiment with AI. >> Yeah, because-- >> In gathering data and feeding it to it. >> 'Cause if the answer is people and throwing people at the problem, then you're not going to scale. >> You're not going to scale, and you're never going to really leverage AI and ML capabilities. You need to be able to do that not in six months, in six days, right, or less. >> So let's talk about your company a little bit. Can you give us the status, you know, where you're at? As their newly minted CEO, what your sort of goals are, milestones that we should be watching in 2020 and beyond? >> Yeah, so newly minted CEO, I came in July of last year. This has been an extraordinary company. I started my journey with this company as an investor. And it was funded by actually two funds that I was associated with, first being Nexus Venture Partners, and then Centerview Capital, where I'm still a partner. And myself and my other two partners looked at the opportunity and what the company had been able to do. And in July of last year, I joined as CEO. My partner, David Dorman, who used to be CEO of AT&T, he joined as chairman. And my third partner, Ned Hooper, joined as President and Chief Operating Officer. Ned used to be the Chief Strategy Officer of Cisco. So we pushed pause on the funding, and that's about as all-in as a fund can get. >> Yeah, so you guys were operational experts that became investors, and said, "Okay, we're going to dive back in "and actually run the business." >> And here's why. So we obviously see a lot of companies as investors, as they go out and look for funding. There are three things that come together very rarely. One is a massive market opportunity combined with the second, which is the right product to serve that opportunity. But the third is pure luck, timing. (Dave chuckles) It's timing. And timing, you know, it's a very very challenging thing to try to predict. You can get lucky and get it right, but then again, it's luck. This had all three. It was the absolute perfect time. And it's largely because of what you described, the 10 years of time that had elapsed, where people had sort of run the experiment and were not going to get fooled again by how easy this supposed to be by just getting one piece or the other. They recognized that they need to take this holistic approach and deploy something as an enterprise-wide platform. >> Yeah, I mean, you talk about a large market, I don't even know how you do a TAM, what's the TAM? It's data. (laughs) You know, it's the data universe, which is just, you know, massive. So, I have to ask you a question as an investor. I think you've raised, what 50 million, is that right? >> We've raised 50 million. The last round was led by NEA. >> Right, okay. You got great investors, hefty amount. Although, you know, in this day and age, you know, you're seeing just outrageous amounts being raised. Software obviously is a capital efficient business, but today you need to raise a lot of money for promotion, right, to get your name out there. What's your thoughts on, as a Silicon Valley investor, as this wave, I mean, get it while you can, I guess. You know, we're in the 10th year of this boom market. But your thoughts? >> You're asking me to put on my other hat. (Dave laughs) I think companies have, in general, raised too much money at too high a value too fast. And there's a penalty for that. And the down round IPO, which has become fashionable these days, is one of those penalties. It's a clear indication. Markets are very rational, public markets are very rational. And the pricing in a public market, when it's significantly below the pricing of in a private market, is telling you something. So, we are a little old-fashioned in that sense. We believe that a company has to lay down the right foundation before it adds fuel to the mix and grows. You have to have evidence that the machinery that you build, whether it's for sales, or marketing, or other go-to-market activities, or even product development, is working. And if you do not see all of those signs, you're building a very fragile company. And adding fuel in that setting is like flooding the carburetor. You don't necessarily go faster. (laughs) You just-- >> Consume more. >> You consume more. So there's a little bit of, perhaps, old-fashioned discipline that we bring to the table. And you can argue against it. You can say, "Well, why don't you just raise a lot of money, "hire a lot of sales guys, and hope for the best?" >> See what sticks? (laughs) >> Yeah. We are fully expecting to build a large institution here. And I use that word carefully. And for that to happen, you need the right foundation down first. >> Well, that resonates with us east coast people. So, Buno, thanks very much for comin' on theCUBE and sharing with us your perspectives on the marketplace. And best of luck with InfoWorks. >> Thank you, Dave. This has been a pleasure. Thank you for having me here. >> All right, we'll be watching, thank you. And thank you for watching, everybody. This is Dave Vellante for theCUBE. We'll see ya next time. (upbeat music fades out)

>> Narrator: From Sand Hill Road, in the heart of Silicon Valley, it's theCUBE, presenting the People First Network, insights from entrepreneurs and tech leaders. >> Hello and welcome to a special Cube conversation, I'm John Furrier with theCUBE. We're here at Mayfield Fund on Sand Hill Road, Venture Cap for investing here for the People First co-created production by theCube and Mayfield. Next to us, Phil Finucane who's the former CTO of Express Scripts as well as a variety of other roles. Went to Stanford, Stanford alum. >> Mm hmm. >> Good to see you, thanks for joining me for this interview. >> Thank you, thank you for having me. >> So, before we get into some of the specifics, talk about your career, you're a former CTO of Express Scripts >> Yep. >> What are some of the other journeys that you've had? Talk about your roles. >> Yeah, I've had sort of a varied career. I started off as just a computer coder for a contract coder in the mid-90s. I sort of stumbled into it, not because I had a computer science background, but because when you start coding, sort of for fun in Silicon Valley in the mid-90s, there are just lots of jobs and I was lucky to have great mentors along the way. In 2003, I joined Yahoo and came in as the lead engineer, sort of the ops guy and the build and release guy for the log in and registration team at Yahoo, so I learned how to, went from being just a coder to being somebody who know how to run and build big systems and manage them all around the world. That was in the day when everything was bare metal and I could go to a data center and actually look at my machine and say, "Wow, that one's mine," right? And you know, sort of progressed from there to being the architect by the time that I left for some of the big social initiatives at Yahoo. On my way out, the YOS, the initiative to try to build Facebook in I think 2007, 2008 to try to take them on. That didn't work out too well, but it was definitely a formative experience in my career. From there I went to Zynga, where I was the CTO for Farmville. Was really, really good at getting middle-aged women in the Midwest to come play our game, and you know, was there for >> And it was highly, >> About three years >> high growth, Farmville >> Huge growth >> Took off like a rocket ship. >> Yeah, you know, over the 10 quarters I worked on the game we had over a billion dollars in revenue and that was, you know, the Zynga IPO'd on the back of that, right? And we weren't the only game, but we were certainly >> That was one of the big games >> The big whale, us and poker were the two that really drove the value in Zynga at that point. After that, I went to American Express, where I worked in a division that sort of sat off on the side of American Express focusing on stored value products. I was the chief architect for that division. Stored value products and international currency exchange. So, you know, at one point, I was in charge of both a pre-paid platform and American Express's traveler's checks platform, believe it or not, a thing that still exists. Although it's not heavily used any more. And you know, finally, I went to Express Scripts, where I spent the last three years as the CTO for that org. >> It's interesting, you've got a very unique background, because you know, you've seen the web scale, talk about bare metal Yahoo days, I mean, I remember those days vividly, you know, dealing with database schemas, I mean certainly the scale of Yahoo front page, never mind the different services that they had, which by the way, silo-like, they had databases >> Very, oh totally >> So building a registration and identity system must've been like, really stitching together a core part of Yahoo, I mean, what a Herculean task that must've been. >> Yeah, it was a lot of fun. I learned a lot, you know, we, it was my first experience in figuring out how to deal with security around the web. You know, we had, at the beginning, some vulnerabilities here and there, as time went on, our standards around interacting around the web got better and better. Obviously, Yahoo has run into trouble around that in subsequent years, but it was definitely a big learning experience, being involved in you know, the development of the OAuth 2.0 spec and all of that, I was sort of sitting there advising the folks who were, you know, in the middle of that, doing all the work. >> And that became such a standard as we know, tokens, dealing with tokens and SAS. Really drove a lot of the SAS mobile generation that did cloud, which becomes kind of that next generation so you had, you know Web 1.0, Web 2.0, then you had the cloud era, cloud 2.0, now they're goin' DevOps and apps. I want to get your thought, and you throw crypto in there just for fun, of dealing with blockchain and then token economics and new kinds of paradigms are coming online >> It's amazing how far we've come in those years, right? I mean I look at the database that was built inside of Yahoo and this predated me, you know, this was back to circa 1996, I think, but you know, big massively scalable databases that were needed just because the traditional relational database just wouldn't work at that scale, and Yahoo was one of the first to sort of discover that. And now you look at the database technologies that are out there today that take some of those core concepts and just extend them so much further and they're so much easier to access, to use, to run, operate, all of those things than back in the days of Yahoozle, UDB, and it's amazing just to see how far we've come. >> Phil, I want to get your thoughts, because you know, talking about Yahoo and just your experiences and even today, at that time it was like changing the airplane's engine at 35,000 feet, it's really difficult. A lot of corporate enterprises right nhow are having that same kind of feeling with digital, and digital transformation, I'd say it's a cliche, but it is true this impact, the role of data that's playing and the just for value creation but also cybersecurity could put a company out of business, so there's all kinds of looming things that are opportunities and challenges, that are sizable, huge tasks that was once regulated to the full stack developers and the full web scalers, now the lonely CIO with the anemic enterprise staff has to turn around on a dime. Staff up, build a stack, build commodity, scale out, this is pretty massive, and not a lot of people are talking about this. What's your view on this? Because this is super important. >> Yeah it is, and you know, so I had kind of a shock, moving from working my whole career here on Silicon Valley and then going to American Express, which you know, is very similar in a lot of ways to Express Scripts, and the sort of corporate mindset around, "What is technology?" There is this notion that everything is IT and here in the valley, IT is you know, internal networks and laptops and those sorts of things, the stuff that's required to make your enterprise run internally. Their IT is all of your infrastructure, right? And IT is a service organization, it's not the competitive advantage in your industry, right? And so both of the places that I've gone have had really forward-thinking leaders that have wanted to change the way that their enterprise operates around technology, and move away from IT but, to technology, to thinking about engineering as a core competency. And that's a huge change, not only for the CIO >> You're saying they did have that vision >> They had the vision, but they didn't know how to get there, so my charter coming in and you know, others who were on the teams around me, our charter was to come in and help build a real engineering organization as opposed to an IT org that's very vendor-oriented, you know, that's dependent on third parties to tell you the right thing or the wrong thing, you know that hires consultants to come in and help set up architecture standards, because we couldn't do that on our own, we're not the experts on this side. You know, that's sort of the mindset in many old school companies, right? That needs, that I think needs to change. This notion that software is eating the world is still not something that people have gotten their heads around in many companies, right? >> And data's washing out old business models, so if software's eating the world, data's the tsunami that's coming in and going to take out the beach and the people there. >> Right. And so it's like, all of these things, it's one thing for, you know, a forward-thinking CEO like Tim Wentworth at Express Scripts, who was responsible for bringing me and the group in, you know, those kinds of folks, it's one thing to know that you have to make that transition it's another thing to have a sense of what that means for an engineering team, and all the more for the rest of the organization to be able to get behind it. I mean, people you know, I don't know any number of business partners who've been used to, just sort of taking a spec, throwing it over the wall, and saying, "Come back to me in two years when you're done." That's not how effective organizations work around technology. >> Let's drill into that, because one of the things that's cultural, I mean I do some of the interviews of theCUBE, I talk to leaders all the time like yourself, the theme keeps coming back, it's culture, it's process, technology, all those things you talk about, but culture is the number one issue people point to, saying, "That's the reason why "something did or didn't happen." >> Correct. >> So, you talk about throwing it over the fence, that's waterfall, so you think about the old waterfall methodology, agile, well documented, but the mindset of product thinking is a really novel concept to corporate America Not to Silicon Valley, and entrepreneurs, they got to launch a product, not roll out SAP over two years, right, or something they used to be doing. So that's a cultural mindset shift. >> It's difficult for folks, even if they want to get on board to come along some of the time. One of the real big successes we had early on at Express Scripts was, you know, transitioning our teams to Agile wasn't difficult, what was difficult was getting business partners to sort of come along and be actively engaged in that product development mindset and lifecycle and all those sorts of things. And you know, we had one partner in particular, we were migrating from a really old, really clunky customer care application that you know had taken years and years to build, took on average, a new agent took six weeks to get trained on it because it was so complex and it's Oracle Forms and you know, every field in the database was a field on this thing, and there were green screens to do the stuff that you couldn't do in Oracle Forms, so and we wanted to rebuild the application. We tried to get them to come along and say, "Okay, we're going to do it in really small chunks," but business partners were like, "No, we can't afford "to have our agents swiveling between two applications." And so finally after we got our first sort of full-feature complete, we begged to go into a call center, you know with our business partners, and sit down with a few agents and just have them use it and see if it looked like it worked, if it did the right thing, and it was amazing seeing the business partner go, over the course of an hour, from "I can't be engaged in this, "I don't want an agent swiveling, "I don't want to be, you know, delivering partial applications "I want the whole thing." to, "Oh my god, it works way better, "the design is much nicer, the agents seem to like it," you know, "Here are the next things we should work on, "These are the things we got wrong." They immediately pivoted, and it wasn't, it was because they're the experts, they know how to run their business, they know what's important in their call centers, they know what their agents need, and they had just never seen the movie before, they just had no concept you could work that way. >> So this is actually interesting, 'cause what you're saying is, a new thing, foreign to the business partners, the tech team's on board, being Agile, building product, they have to, they can't just hear the feature benefits, they got to feel it. >> Yeah, they have to see it >> This seems to be the experience of success before they can move. Is that a success you think culturally, something that people have to be mindful of? >> It's absolutely something you have to be mindful of. And that was just the first step down the path. I mean, that team made a number of mistakes that folks here I think in the valley wouldn't normally make, you know. Over-committing and getting themselves into deep water by trying to get too much done and actually getting less accomplished in the process because of it and you know, the engagement around using data to actually figure out what's the next feature that we build. When you've got this enormous application to migrate, you should probably have some insight as to you know, feature by feature, what are you going to work on next? And that was a real challenge, 'cause there's a culture of expertise-driven, you know being subject-matter driven, expertise driven as opposed to being data driven about how do you >> Let's talk about data-driven. We had an interview earlier this morning with another luminary here at the Mayfield 50th conference celebration that they're having, and he said, "Data is the new feedback mechanism." and his point was, is that if you treat the Agile as an R&D exercise from a data standpoint. Not from a product but get it out there, get the data circulating in, it's critical in formulation of the next >> It is, yeah, it's absolutely critical. That was the eye opener for me going to Zynga. Zynga had an incredible, probably still does have, an incredible product culture that every single thing gets rolled out behind an experiment. And so you know, that's great from an operational perspective, because it allows you to, you know, move quickly and roll things out in small increments and when it doesn't work, you can just shut it off but it's not some huge catastrophe. But it's also critical because it allows you to see what's working and what's not and the flip side of that is, some humility of the people developing the products that their ideas are not going to work sometimes just because you know this domain well doesn't mean that you're necessarily going to be the expert on exactly how everything is going to play out. And so you have to have this ability to go out, try stuff, let it fail, use that, hopefully you fail quickly, you learn what's not working and use that to inform what's the next step down the path that you take, right? And Agile plays into it, but that's for me, that's the big transition that corporations really have to struggle with, and it's hard. >> You know you're, been there done that, seen multiple waves of innovation, want to bring up something to kind of get you going here. You see this classically in the old school 90s, 80s day. Product management, product people and sales people. They're always buttin' heads, you know? Product marketing, marketing people want this sales and marketing want this, product people buttin' heads, but now with Agile, the engineering focus has been the front lines. People are building engineering teams in house. They're building custom stacks for whatever reasons, the apps are getting smarter. The engineers are getting closer to the edge, the customer if you will. How do you help companies, or how do you advise companies to think about the relationship between a product-centric culture and a sales-centric culture? Because sometimes you have companies that are all about the customer-centric, customer-centric customer-centric, product-centric and sometimes if you try to put 'em together there's always going to be an alpha-beta kind of thing there and that's the balance in this. What's your take on this? Seems to be a cutting edge topic >> Yeah, well, so you know, one of the last big initiatives that I worked on at Express Scripts. Express Scripts has the, to my knowledge, the largest automated home delivery pharmacy in the world. It's amazing if you walk into one of our pharmacies where automation is packaging and filling prescriptions and packaging and shipping and doing all of that stuff. And we've built so much efficiency into the process that we've started getting slack in the system. Every year, you're trying to figure out how to make something work better and you know, have better automation around it. And so, you know, what do you do with all of that slack? The sales team can't sign up enough new customers for Express Scripts to actually fill that capacity. And so they create a division of commoditizing this, basically white labeling your pharmacy. We called it Pharmacy as a Platform, exposing APIs to third parties who might want to come along and hey, Phil's pharmacy can now fill branded prescriptions to get sent to you in your home, right? And so that's a fantastic vision, but there's a real struggle between engineering who had all these legacy stacks that we needed to figure out how to move to be able to really live up to this, you know the core of Express Scripts was our members and not somebody else's members. And so there's a lot of rewiring at the core that needs to be done. An operations team, a product team that's, you know, running these home delivery pharmacies, and a sales team that wants to go off and sell all over the place, right? And so, you know, early on, we started off and the sales team tried to sell, like six different deals that all required different parts of the vision, but you know, they weren't really, there was no real roadmap to figure out how do you get from where we're at to the end, and we could've done any of those things, but trying to do them all at once was going to be a trainwreck. And so, you know, we stubbed our toes a couple of times along the way, but I think it just came down to having a conversation and trying to be as transparent as possible on all sides, in all sides. To you know, try to get to a place where we could be effective in delivering on the vision. The vision was right. Everybody was doing all of the right things. But if you haven't actually, with so much of this stuff, if you haven't seen the movie, if you haven't worked this way before, there's nothing I can tell you that's going to make it work magically for you tomorrow. You have to just get this together and work in small increments to figure out how to get there. >> You got to go through spring training, you got to do the reps. >> Yep, absolutely. >> All right, so on your career, as you look at what you've done in your career, and what people outside are looking at right now, you got startups trying to compete and get a market position. You have other existing suppliers who could be the old guard, retooling and replatforming, refactoring, whatever the buzz word you want to use. And then the ultimate customer who wants to consume and have the ability of having custom personalization, data analytics, unlimited elastic capability with resources for their solution. How, what advice would you give to the startup, to the supplier, and to the customer to survive this next transition of cloud 2.0, you know and data tsunami, and all the opportunities that are coming? Because if they don't, they'll be challenged a startup goes out of business, a supplier gets displaced. >> Right, I mean, well, so the startup, I don't know if I have good advice for the startup. Startups in general have to find a market that actually works for them. And so, you know, I don't know that I've got some secret key that allows startups to be effective other than don't run out of money, try to figure out how to build effectively to get you to the point where you're, you know, where you're going to win. One of my earliest, one of the earliest jobs I had in my career, I came into a startup, and I tried, one of the founders had written the initial version of the code base. I, as a headstrong engineer, was convinced that he had done horrible work, and so I sort of holed up for like, six to eight weeks doing a hundred hours a week trying to rewrite the entire code base while getting nothing done for the startup. You know, in the end, that was the one job I've ever been fired from, and I should've been fired, because, you know, honestly as a startup, you shouldn't worry about perfection from an engineering perspective. You should figure out how to try to find your marketplace. Everybody has tech debt, you can fix that as time goes on, the startup needs to figure out how to be viable more than anything else. As far as suppliers go, you know, I don't know it's interesting the, you know, I sort of look at corporate America and there are many many companies that really rely heavily on their vendors to tell them how to do things. They don't trust in their own internal engineering ability. And then there are the ones, like the teams I have built at AmEx and Express Scripts that really do want to learn it all and be independent. I would say, identify when you walk into somebody's shop which they are and sell to them appropriately. You know, I've been a Splunk customer for a long time, I love Splunk. But the Splunk sales team early on at Express Scripts tried to come in and sell me on a whole bunch of stuff that Splunk was just not good at, right? >> And you knew that. >> And I knew that, because I've been a hands-on customer every since Zynga, right? I know what it's good at, and I love it as a tool, but you know, it's not the Swiss Army knife. It can't do everything. >> Well now you got Signal FX, so now you can get the observability you need. >> Exactly, right? So yeah, I, you know, I would say, you know, for those kinds of companies, it's important to go in and understand what your customer is, you know, what your customer is asking for and respond to them appropriately. And in some cases, they're going to need your expertise, either because they're building towards it or they haven't gotten there yet, and some cases, one of the things that I have done with teams of mine in the past, was it with AppDynamics at Express Scripts, excuse me at AmEx, five or six years ago, they were sold on, you know, bringing in AppDynamics as a monitoring tool, I actually made them not bring it in, because they didn't know what they didn't know. I made them go build some basic monitoring, you know, using some open source tools, just to get some background, and then, you know, once they did, we ended up bringing AppDynamics in, but doing it in a way that they were accretive to what we were trying to accomplish and not just this thing that was going to solve all of our problems. >> And so that brings up the whole off-the-shelf general purpose software model that you were referring to. The old model was lean on your vendors. They're supplying you, and because you don't have the staff to do it yourself. That's changing, do you think that's changing? >> It is, it's changing, but again, I think there's a lot of places where people nominally want to go there, but don't know how to get there, and so, you know, people are stubbing their toes left and right. If you're doing it with this mindset of, we're constantly getting better and we're learning and it's okay to make mistakes as long as we move forward, >> It's okay to stub your toe as long as you don't cut an artery open. >> Yeah, that's true, yeah exactly >> You don't want to bleed out, that's a cybersecurity hack >> That's true, that's true. But for me a lot of the time that just comes down to how long are you waiting before you stub your toe? If you're, you know, if you wait two years before you actually try to launch something, the odds of you cutting your leg off are much higher than >> Well I want to get into the failure thing, so I think stubbing your toe brings up this notion of risk management, learning what to try, what not to do, take experiments to try to your, which is a great example. Before you get there, you mentioned suppliers. One of the things we hear and I want to get your thoughts on, is that, a lot of CIOs and C-sos, and CBOs, or whatever title is the acronym, they're trying to reduce the number of suppliers. They don't want more tools, right? They don't necessarily want another tool for the tool's sake or they might want to replatform, what does that even mean? So, we're hearing in our interviews and our discussions with partitioners, "Hey, I want to get my suppliers down, "and by the way, I want to be API driven, "so I want to start getting to a mode "where I'm dictating the relationship to suppliers." How do you respond to that? Do you see that as aspirational, real dynamic, or fiction? >> It's a good goal to give motivation, I believe it. For me, I approach the problem a little differently. I'm a big believer, well, so, because I've seen this pattern of this next tool is going to be the one that consolidates three things and it's going to be the right answer and instead of eliminating three and getting down to one, you have four, because you're, you need to unwire this new thing, there's a lot of time and effort required to get rid of, you know, your old technology stack, and move to the new one, right? I've seen that especially coming from the C-Sec for Express Scripts is an amazing guy, and you know, was definitely trying to head down that path but we stubbed our toes, we ran into problems in trying to figure out, you know, how do you move from one set of networking gear to the next set? How do you deal with, you know, all of the virus protection and all the other, there's a huge variety of tools. >> So it's not just technical debt, it's disruption >> It's disruption to the existing stack, and you've got to move from old to new, so my philosophy has always been, with technical debt, when you're in debt, and I think technical debt really does operate in a lot of ways like real debt, right? Probably good to have some of it. If you're completely debt-free, that's I've never been in that place before. >> You're comfortable. You might not be moving, >> Exactly, right? But with that technical debt, you know, there's two ways to pay down your debt. You can scrimp and save and put more money into debt principal payments as opposed to spending on other new things, or, well and/or, build productive capacity. So a huge focus for me for the engineering teams that we've built, and this is not anything new to the folks in this area, but, you know, always think about an arms race, where you're getting 1% better every day. The aggregation of marginal gains and investing in internal improvements so that your team is doubling productivity every year, which is something that's really possible for, you know, some of these engineering organizations, is the way that you deal with that, right? If you get to the point where your team is really, really productive, they can go through and eliminate all the old legacy technology. >> That's actually great advice, and it's interesting, because a lot of people just get hung up on one thing. Operating something, and then growing something, and you can have different management styles and different techniques for both, the growth team, the operating team. You're kind of bringing in and saying, we can do both. Operate with growth in mind, to 1% better approach. >> Right, you know, and for me, it's been an interesting journey, you know. I started off as the engineer and then the architect, who was always focused on just the technology, the design of the system in production. Sort of learned from there that you had to be good at the you know, all the systems that get code from a developer's desktop into production, that's a whole interrelated system that's not isolated from your production system. And then from there, it has to be the engineering team that you build has to be effective as well. And so, I've moved from being very technology-centric to somebody who says, "Okay, I have to start "with getting the team right "and getting the culture right if we're ever going to "be able to get the technology to a good place." Mind you, I still love the technology. I'm still an architect at my core, but I've come to this realization that good technology and bad teams will get crushed by bad technologies and good teams. Because now I've seen that a couple of places, where you have old but evolving technology stacks that have gone from low availability and poor performance and low ability to get new features into production to a place where you're fixing all of that at a high rate. It starts with the team. >> You're bringing us some core Silicon Valley ethos to the IT conversation, because what you're talking about is "I'll fund an A team with a B plan any day "over a B team with an A plan." >> Right. >> And where this makes sense, I think is true, is that to your point about debt, A teams know how to manage it. >> Yeah. >> So this is kind of what you're getting at here. >> Right. >> You can take that same ethos, so it's the Agile enterprise. >> Yeah, it is >> That's what we're talking about. Okay, so hypothetical final point I want to chat with you about. Let's just say you and I were startin' a company. We're chief architects, you're the chief architect, I'm a coder, what are we doing? Do I code from horizontally scalable cloud, certainly cloud native, how would you think about building, we have an app in mind, all of our requirements defined, it's going to be data-centric, it's going to be game change and have community, it might have some crypto in there, who knows, but it's going to be fun. How do we scale this out to be really fast? How would you architect this? >> Yeah, well, you know, I do start in the cloud. I go to AWS or Azure or any of the offerings that are out there, and you know, leverage everything that they have that's already wired up already for you. I mean the thing that we've seen in the evolution of software and production systems over the last, well, forever, is you get more and more leverage every day, every year, right? And so, if you and I are startin' a new company, let's go use the tools that are there to do the things that we shouldn't be wasting our time on. Let's focus on the value for our company as much as we can. Don't over-architect. I think premature optimization is a thing that you know, I learned early on is a real problem. You should, you know >> Give an example, what that would look like. >> I've seen >> Database scale decisions done with no scale >> Correct, yeah, you know? You go off >> Let's pick this! It's the most scalable database, well we have no users yet. >> Right, you know you build the super complicated caching architecture or you know, you go design the most critical part of the system out of the gate, you know, using Assembly. You use C++ or, you use a low level language when a high level language with your three users would be just fine, right? You can get the work done in a fraction of the time. >> And get the business logic down, the IP, >> Solve the problem when it becomes a problem. Like, it's, you know, I've, any number of times, I've run into systems, I've built systems where you have some issue that you run into, and you have to go back and redesign some chunk of the system. In my experience, I'm really bad at predicting, and I think engineers are really bad at predicting what are going to be the problem areas until you run into them, so just go as simple as you can out of the gate, you know. Use as many tools as you can to solve problems that, you know, maybe as an engineer, I want to go rebuild every thing from scratch every time. I get the inclination. But it's >> It's a knee-jerk reaction to do that but you stay your course. Don't over-provision, overthink it, thus start taking steps toward the destination, the vision you want to go to, and get better, operate >> Solve the problem you have when it shows up. >> So growth mindset, execute, solve the problems when they're there. >> Right, and initially the problem that you have is finding a market, you know, not building the greatest platform in the world, right? >> Find a market, exactly. >> Right? >> Phil, thanks for taking the time >> Thank you very much, appreciate it. >> Appreciate the insights. Hey, we're here for the People First, Mayfield's 50th celebration, 50 years in business. It's a CUBE co-production, I'm John Furrier, thanks for watching >> Thanks John. (outro music)

(upbeat music) >> Welcome to this special Cube Conversation. We're here in Palo Alto, California with a special guest. Dialing in remotely Paul Martino, the founder of Bullpen Capital and also the producer of an upcoming film called The Inside Game. It's a story about a true story about an NBA betting scandal. It's really, it's got everything you want to know. It's got sports, it's got gambling, it's got fixing of games. Paul Martino, known for being a serial entrepreneur and then an investor, investing in some great growth companies, and now running his own firm called Bullpen Capital, which bets on high-growth companies and takes them to the next level. Paul, great to see you. Thanks for spending the time. Good to see you again. >> John, always good to see you. Thanks for having me on the show. >> So, you're a unique individual. You're a computer science whiz, investor, entrepreneur, now film producer. This story kind of crosses over your interests. Obviously in Philly, you're kind of like me, kind of a blue collar kind of guy. You know hot starters when you see it. You also were an investor in a lot of the sports, gambling, betting, kind of online games, we've talked about in the past. But now you're crossing over into filming movies. Which is, seems like very cool and obviously we're living in a date of digital media where code is software, code is content, obviously we believe that. What's this movie all about? All the buzz is out there, Inside Game. You get it on sports radio all the time. Give us the scoop. Why Inside Game? What's it about? Give us the 411. >> Yeah, so John, I mean, this is a story that picked me. My producing partner in this is a guy named Michael Pierce who made a bunch of great movies, including The Cooler, one of the best gambling movies, with William H Macy. And he says sometimes the movie picks you and sometimes you pick the movie. And I wasn't sitting around one day going wow I want to be a movie producer, it was just much more that my cousin is the principal in the story. My cousin was the go-between between the gambler and the referee. The three of them were friends ever since they were kids. And when they all got out of jail Tommy called me, Tommy Martino. He said hey Paulie, you're about the only legitimate business guy I know. Could you help me with my life rights? And that's how this started almost six years ago. >> And what progressed next? You sat down, had a couple cocktails, beers, said okay here's how we're going to structure it. Was it more brainstorming and then it kind of went from there? Take us through that progression. >> It was a pure intellectual property exercise, and this is where being a startup guy was helpful. I was like, Tommy, I'll buy your life rights. Maybe we'll get a script written, we'll put it on the shelf, so that if anybody ever wants to make this story they have to go through us. Almost like a blocking patent or a copyright. And he's like okay cool. And so I said I have no delusions of ever making this movie. I actually don't know that, I don't know anybody to make a movie. This is not my skill set. But if anybody ever wants to make the movie, they're going to have to come deal with us. And then the lucky break happens, like anything in a startup. I have this random meeting with a guy named Michael Pierce, who was at a firm called WPS Challenger out of London. And we're down in Hillstone in Santa Monica, and I say to him, I say I've got this script written about this NBA betting scandal, would you do me a favor? He literally laughs in my face. He goes a venture guy from Silicon Valley is going to hand me a script. What a bad, anyway, I was like look dude, I'm a good guy to have owe you a favor so just read this dang thing. About 8 hours later my phone rings, he says who the hell is Andy Callahan? This is the best script I've ever read in my entire life. Let's go make a movie. Andy Callahan was a friend of a friend from high school who wrote the script. He actually once beat Kobe Bryant when he was a center at Haverford when Kobe Bryant played at Lower Merion here in the Philly suburbs. So, it's kind of this local Philly story. I'm a local Philly blue collar guy, we put the pieces together, and I'll be danged and now six years later the film is in the can and you're probably going to see it during the NBA finals this year in June. >> All right, so there's some news out there it's on the cover on ESPN Magazine, the site is now launched. I've been hearing buzz all morning on this in the sports radio world. A lot of buzz, a lot of organic virality around it. Reminds of the Crazy, Rich Asians, which kind of started organically, similar kind of community behind it. This has really got some legs to it. Give us some taste of what's some of the latest organic growth here around the buzz. >> Yeah so, think about this. This happened in, primarily '06 and '07. They were sentenced in 2010 and were in jail in 2011. It is 2019 and the front page story on ESPN is What Tim, Tommy, and Jimmy Battista Did. Those were the three guys, the gambler, the ref, and the go-between. And this is a front page story on ESPN all these years later. So we know this story has tremendous legs. We know this movie has a tremendous built-in audience. And so now it's just our job to leverage all those marketing channels, places we pioneered, like Zynga and FanDuel to get people who care about the story into the theaters. And we're hoping we can really show people how to do a modern way to market a film using those channels we've pioneered at places like FanDuel and Zynga. >> You and I have had many conversations privately and here on the Cube in the past around startups disruption, and it's the same pattern right? No one thinks it's a great idea, you get the rights to it, and you kind of got to find that inflection point, that magical moment which comes through networking and just hard work and hustle. And then you've got everything comes together. And then it comes together. And then it grows. As the world changes, you're seeing digital completely change the game on Hollywood. For instance, Netflix, you've got Prime, you've got Hulu. This is, essentially, a democratization, I'm not saying, well first of all you've made some money so you had some dough to put into it, but here's a script from a friend. You guys put it together. This is now the new startup model going to Hollywood. Talk about that dynamic, what's your vision there? Because this, I think, is an important signal in how digital content, whether it's guys in the Cube doing stuff or Cube Studios, which we'll, we have a vision for. This is something that's real. Talk about the dynamic. How do you see the entrepeneurial vision around how movies are made, how content's made, and then, ultimately, how they're merchandised in the future. >> Right, there's a whole, there's a whole bunch of buckets. There's the intellectual property bucket of the story, the script, etc. Then there's the bucket of getting the movie made. You know, that's the on the set and that's the director and that's post-production, and then there's the marketing. And what was really interesting is even though I'd never made a movie, two of those three buckets I knew a tremendous amount about from my experience as a startup investor. The marketing and the IP side I understood almost completely, even though I'd never made a film. And so all of the disruptive technologies that we learn for doing disruptive things like marketing a new thing called Daily Fantasy Sports, we were able to bring to bear to this film. Now, I had fun on the set and meeting all the actors, etc. But I had no delusion that I knew about the making of the movie part. So I plead ignorance there, but of the three buckets that you need to go make something in the media space 66% of what I knew as a startup guy overlapped and I think this is what the future of the media is. Because guys like me and you, John, we actually know a lot about this because we're startup people as opposed to we have to learn about it in terms of how to market and how to get an audience. I mean, my last company Aggregate Knowledge designs custom audiences for ad targeting. So we know how to find gamblers to go see this movie. That's literally the company I started. And so that's a thing that I'm very, very comfortable with and it's exciting to then work with the producer who did the creative and the director and I say hey guys, I've got this marketing thing under control, I know how to do it, oh by the way, the old Head of Marketing from FanDuel, he's a consultant to the project. Right, so, we got that. >> You got that, and the movie's being made. That's also again, back to entrepreneurship, risk. You got to take risks, right? This is all about risk management at the end of the day and you know, navigating as the lead entrepreneur, getting it done, there's heavy lifting and costs involved in making the movie, >> Right >> How did you, that's like production, right? You got to build a product. That is ultimately the product when it has to get to market. How did that go, what's your thoughts on your first time running a movie like this, from a production standpoint, learnings, observations? >> I learned a tremendous amount. I must admit, I was along for the ride on that piece of the puddle, puzzle. The product development piece of this was all new to me. But then again, I mean think about it, John, I started four companies, a social network, an ad targeting company, a game company, and a security company. I didn't know anything about those four companies when I started them either in terms of what the product needed to do. So learning a new product called make a movie was kind of par for the course, even though I didn't really know anything about it. You know, if you're going to be a startup person you got to have no fear. That's the real attribute you need to have in these kinds of situations. >> So I got to >> And so, witnessed that first-hand and, you know what, now, if I ever make a movie again I kind of know how to make that product. >> Yeah, well looking forward. You've got great instincts as an entrepreneur. I love hanging out with you. I got to ask you a question. I talk to a lot of young people, my son and his friends and I see people coming out of business school, all this stuff. You know, every college has an entrepreneurial program. Music, film, you know, whatever, they all have kind of bolted on entrepreneurship. You're essentially breaking down that kind of dogma of that you have to have a discipline. Anyone can do this, right? So talk about the folks that are out there, trying to be entrepreneurial, whether you're a musician. This is direct to consumer. If you have skills as an entrepreneur it translates. Talk about what it takes to be an entrepreneur, if you're a musician or someone who has, say, content rights or has content story. What do they do? What's your advice? >> We have lived through, perhaps the most awesome period of the last five to 10 years, where it got cheap to do a startup. You know, when we're doing our first startups 20 years ago, it cost 5 million bucks to go get a license from Oracle and go hire a DBA and do all that stuff. You know what, for 5 grand you can get your website up, you can build, you can use your iPhone, you can film your movie. That's all happened in the last five to 10 years. And what it's done is exactly the word you used. It's democratized who can become an entrepreneur. Now people who never thought entrepreneurship was for them, are able to do it. One of our great examples of this is Ipsy, our cosmetics company. You know, Michelle Phan was a cocktail waitress working in Florida, but she had this YouTube following around watching her videos of her putting her makeup on. And you know when we met her, we're like you know what? You're the next generation of what entrepreneurs look like. Because no, she didn't go to Stanford. She didn't have a PhD in computer science, but she knew what this next generation of content marketing was going to look like. She knew what it was to be a celebrity influencer. You know, that company Ipsy makes hundreds of millions of dollars every year now, and I don't think most people on Sand Hill would've necessarily given Michelle the chance because she didn't look like what the traditional entrepreneur looked like. So it's so cool we live in a time where you don't need to look like what you think an entrepreneur needs to look like or went to the school you had to think you'd go to to become an entrepreneur. It's open to everybody now. >> And the key to success, you know, again, we've talked about those privately all the time when we meet, but I want to get your comment on the record here. But I mean, there's some basic blocking and tackling that's independent of where you went to school that's being creative, networking, networking, networking, you know, and being, good hustle. And being, obviously good judgment and being smart. Do your thoughts on the keys to success for as those folks saying hey you know I didn't have to go to these big, fancy schools. I want to go out there. I want to test my idea. I want to go push the envelope. I want to go for it. What's the tried and true formula from your perspective? >> So when you're in the early stage of hustling and you want to figure out if you're good at being an entrepreneur, I tell entrepreneurs this all the time. Every meeting is a job interview. Now, you might not think it's a job interview, but you want to think about every meeting, this might be the next person I start my company with. This might be the person I end up hiring to go run something at my company. This might be the person I end up getting money for, from to start my company. And so show up, have some skills, have some passion, have a vision, and impress the person on the other side of the table. Every once in a while I get invited to a college and they're like well Paul, life's easy for you, you started a company with Mark Pinkus and you're friend with Reid Hoffman and this... Well how the hell do you think I met those people? I did the same thing I'm telling you to do. When I was nobody coming out of school, I went and did stuff for these guys. I helped them with a business plan. I wrote the code of Tribe, and then now all of the sudden we've got a whole network of people you can go to. Well, that didn't happen by accident. You had to show up and have some skills, talent, and passion and then impress the person on the other side of the table. >> Yeah >> And guess what? If you do that enough times in a row, you're going to end up having your own network. And then you're going to have kids come in and say, wow, how can I impress you? >> Be authentic, be genuine, hustle, do networking, do the job interview, great stuff. All right, back to final point I want to get your thoughts on because I think this is your success and getting this movie out of the gate. Everyone, first, everyone should go see Inside Game. Insidegamemovie.com is the URL. The site just went up. This should be a great movie. I'm looking forward to it, and knowing the work that went in, I followed your journey on this. It should be great. I'm looking forward to seeing it. Uh, digital media, um, your thoughts because we're seeing a direct to consumer model. You've got the big companies, YouTube, Amazon, others. There's kind of a, a huge distribution of those guys. The classic Web 2.0 search kind of paradigm and portal. But now you've got a whole 'nother set of distribution or network effects. Your thoughts, because you were involved in, again, social networking before it became the monster that it is now. How is digital media changing? What's your vision of how that's happening and how does someone jump on that wave and be successful? >> Yeah, we're in the midst of disruption. I mean, I'm in the discussions and final negotiations right now on how we're going to end up ultimately doing the film distribution. And I am very disappointed with the quality of the thinking of the people on the other side of the table. Because they come from very traditional backgrounds. And I'm talking to them about, I want to do a site takeover across Zynga. I want to do a digital download on FanDuel of a 20 minute clip of the film. And they're like what's FanDuel? Who's Zynga? And I'm sitting there, I'm like guys, this is the new media. Oh, by the way, there's a sports app called Wave and Wave is where the local influencers in the markets who want to write the stories are, and we want to do a deal with those guys. And oh, by the way, the CEO of that company is a buddy of mine I met years ago, right? One of those kids I gave advice to, and now I'm going to ask him for a favor from, right, that's how it works. But, it's amazing when you have these conversations with traditional old line media companies. They don't understand any of the words coming out of your mouth. They're like Paul, here's how much I'll give you for your film. Thank you, we'll go market it. I'm like, really? Seriously? I got the former CMO of FanDuel going to help out on this. You don't want to talk to him? >> Yeah >> And so this is where the industry is really ripe for disruption. Because the people from the startup world have already disrupted the apple cart and now we've just got to demonstrate that this model is going to continue to work for the future and be ready when the next new kind of digital transmedia thing comes along and embrace that, as opposed to be scared to death of it or not even know how to talk the language of the people on it. >> Well, you're doing some amazing venturing in your, kind of, unique venture capital model on Bullpen Capital. Certainly isn't your classic venture capital thing, so I'm sure people are going to be talking to you about oh, Paul, are all VCs going to be doing movies? I'm sure that's a narrative that's out there. But you're not just a normal venture capital. You certainly invest. So, venture capitals have reputation issues right now. People talk about, well, you know, they're group think. You know, they only invest in who they see themselves. You mentioned that comment there. The world's changing in venture. Your thoughts on that, how you guys started your firm, and your evolution of venture capital. And is this a sign that you'll see venture capitalists go into movies? >> Well, I don't know about that part. There have been a couple venture people who have done movies. But the part I will talk about is the you got to know somebody, it's an inside game, ha ha, we'll play double entendre on Inside Game here. You know, 20% of the deal we've done at Bullpen, we've done over 100. 20% of them were cold emails on something like LinkedIn or business plans at bullpen.com. 20%, now there's this old trope in venture if you don't get a warm intro I won't even talk to you. Well 20% of our deals came in and we had no idea who the person on the other side was. That's how we run the firm. And so if you're out there going I'm one of those entrepreneurs in the Midwest and no one, I don't know anyone. I'm not in a network, send me a plan. I'm someone who's going to look at it. It doesn't mean I'm going to be an investor, but you know what I'm going to do? I'm going to give you a shot. And I don't care where you're from or what school you went to or what social clique you're in or what your political persuasion is. Matter of fact, I literally don't care. I'm going to give you a shot. Come into my office and that, I think, is what was missing in a lot of firms, where it's a we only do security and we only look at companies that spun out of Berkeley and Stanford. And yeah, there can be an old boys network in that. But you know what, we like to talk to everybody. And the more blue collar the CEO is, the more we love them at Bullpen. >> That's awesome. Talk about the movie real quick on terms of how Hollywood's handling it. Um, expectations, in terms of reaction, was it positive, is it positive, what's the vibe going on in Hollywood, is this going to be a grassroots kind of thing around the FanDuels and your channels? What's your plan for that and what's the reaction of Hollywood? >> So it's going to be a lot of all of the above. But PR is going to be a huge component, I mean, part of the reason we're on today is there's a huge front page story on ESPN about Tim Donaghy and the NBA betting scandal of 2007. And so the earned media is going to be a huge component of this. And I think this is where the Hollywood people do understand the language we're speaking. We're like, look, we have a huge built-in audience that we know how to market to. We have a story. Actually, in the early days, you asked about risk? Back when I was thinking about if I would do this project I would do the following little market research. I'd walk into a sports bar, it didn't matter what town I was in. I could be in Dallas, I could be in Houston, I could be in Boston. I would literally walk up to the bar and say, hey, uh, six of you at the bar, ever hear of Tim Donaghy? It'd be amazing. About seven out of 10 people would go yeah he was the referee, crooked referee in the NBA. I'm like, this is amazing. Seven out of 10 people I meet in a bar know about the story I want to go tell. That sounds like a good chance to make a movie, as opposed to a movie that has no built-in audience. And so, a built-in audience with PR channels that we know work, I think we can really show Hollywood how to do this in a different way if this all works. >> And this comes back to my point around built-in audiences. You know, YouTube has got a million subscribers. That's kind of an old metric. That means they, like an RSS feed kind of model. That's a million people that are, could be, amplifying their network connections. It is a massive built-in audience. The iteration, the DevOps kind of mindset, we talk about cloud computing, can be applied to movies. It's agile movie making. That's what you're talking about. >> Yeah, and by the way, so we have a social network of all the actors and people in the film. So when it's ready, let's go activate our network of all the actors that are in the film. Each of them have a couple million followers. So let's go be smart. Let's, two weeks before the movie, let's send some screenshots. A week before the movie let's show some exclusive videos. Two days before the film, go see it, it's now out in the theaters. You know what, that's pretty, that's 101. We've got actors. We've got producers. Like, let's go use the influencer network we built that actually got the movie made. Let's go on Sports Talk, talk about the movie. Let's go on places like this and talk about how a venture guy made a movie. This is the confluence of all of the pieces all coming together at once. And I just don't think enough people in the film business or in the media business think big enough about going after these audiences. It's oh, we're going to take ads out on TV and I'm going to see my trailer and we're going to do this and that's how we do it. There's so many better ways to get your audience now. >> And this is going to change, just while I've got you here, it's just awesome, awesome conversation. Bringing it back to kind of the CMO in big companies, whether it's consumer or B to B or whatever, movies, the old model of here's our channels. There's certainly this earned media kind of formula and it's not your classic we've got a website, we're going to do all this instrumentation, it's a whole 'nother mechanism. So talk about, in your opinion, the importance of earned media, vis a vis the old other buckets. Owned media, paid media, well-defined Web 1.0, Web 2.0 tactics, earned media is not just how good is our PR? It's actually infrastructure channels, it's networks, a new kind of way to do things. How relevant and how important will this be going forward? Because there's no more website. It's a, you're basically building a media company for this movie. >> That is exactly right. We're building an ad hoc media business. I think this is what the next generation of digital agencies are going to look like. And there are some agencies that we've talked to that really understand all of what you've just said. They are few and far between, unfortunately. >> Yeah, well, Paul, this was theCube. We love talking to people, making it happen. Again, our model's the same as yours. We're open to anyone who's got signal, and you certainly are doing a great job and great to know you and follow your entrepreneur journey, your investment journey, and now your film making journey. Paul Martino, General Pen on Bullpen Capital, with the hot film Inside Game. I'm definitely going to see it. It should be really strong and it's going to be one of those movies like Crazy, Rich Asians, where not looking, not really well produced, I mean not predicted to be great and then goes game buster so I think this is going to be one of those examples. Paul, thanks for coming on. >> Love it, thank you! >> This Cube Conversation, I'm John Furrier here in Palo Alto, California, bringing ya all the action. Venture capitalist turned film maker Paul Martino with the movie Inside Game. I'm John Furrier, thanks for watching. (triumphant music)

>> Announcer: Live from San Francisco it's TheCUBE covering Samsung Developer Conference 2017. Brought to you by Samsung. (digital music) >> Hey welcome back and we're live here in San Francisco this is TheCUBE's exclusive coverage Samsung Developer Conference #SDC2017, I'm John Furrier co-founder of SiliconANGLE Media Coast My next guest is Ken Yeoung tech reporter here inside TheCUBE. I've known Ken for almost 10 years now plus been in the Silicon Valley beat scene covering technology, communities, and all the cutting edge tech but also some of the old established companies. Great to see you. >> Likewise, thanks for having me. >> So tech reporter, let's have a little reporter session here because reporting here at Samsung, to me, is my first developer conference with Samsung. I stopped going to the Apple World Developer Conference when it became too much of a circus around, you know, close to a couple of years before Steve Jobs died. >> Right. >> Now this whole scene well we will have to talk to Steve Gall when we get down there but here, my first one, my reports an awakening I get the TV thing but I'm like IoT that's my world. >> Ken: Oh really? >> I want to see more IoT >> Ken: Yeah. >> So it's good to see Samsung coming into the cloud and owning that. So, that's exciting for me. What do you see as a report that you could file? >> You know, so it's funny because I actually did write a post this morning after watching the keynote yesterday. While I was at VentureBeat a few months ago I reported on Bixby's launch when it came out with the Galaxy S8 and when I heard about what that was it was kind of interesting. That was one of the biggest selling points for me to switch over from my iPhone. And when I tried it out it was interesting. I was kind of wondering how it would stand up against Google Assistant because both of them are installed on the same device. But now as you see with Bixby 2.0 and now with the SmartThings you start to see Samsung's vision. Right now it's on a mobile, it's just very piecemeal. But now when you tackle it on with the TVs, with the fridges, monitors, ovens and everything like that it becomes your entire home. It becomes your Jarvis. You don't actually have to spend 150 bucks or 200 bucks on an Alexa-enabled device or Google Home that most people may not be totally familiar with. But if you have a TV you're familiar with it. >> Obviously you mentioned Jarvis. That's reference to the old sitcom and when Mark Zuckerberg tried his Jarvis project which was, you know, wire his home from scratch. Although a science project, you talk about real utility. I mean so we're getting down to the consumerization so let's take that to the next level. >> Ken: Right. >> If you look at the trends in Silicon Valley it's certainly in the tech industry block, chain and ICOs are really hot. Mission point offerings. That's based on utility right? So, utility-based ICOs, so communities using gamification. Game apps, utility. Samsung, SmartThings. Using their intelligence to not just be the next Amazon. >> Right >> The commerce cloud company, they're just trying to be a better Samsung. >> Ken: Exactly. >> Which they've had some problems in the past and we've heard from analysts here Patrick Morgan was on, pointed out... Illustrated the point. They're a stovepipe company. And with Bixby 2.0 they're like breaking down the silos. We had the execs on here saying that's their goal. >> Ken: Exactly. Yeah if you look on here everything has been siloed. You look at a lot of tech companies now and you don't get to see their grand vision. Everyone has this proto-program when they start these companies and when they expand then you start to see everything come together. Like for example, whether it's Square, whether it's Apple, whether it's Google or Facebook, right? And Samsung, a storied history, right, they've been around for ages with a lot of great technology and they've got their hands in different parts. But from a consumer standpoint you're like likelihood of you having a Samsung device in your home is probably pretty good and so why not just expand that leverage that technology. Right now tech is all about AI. You start to see a lot of the AI stars get acquired or heavily funded and heavily invested. >> Really The Cube is AI, we're AI machine right here. Right here is the bot, analyst report. People are AI watching. But I mean what the hell is AI? AI is machine learning, using software, >> Data collection. >> Nailed it. >> And personalization. And you look at I interviewed a Samsung executive at CAS last year this January, and he was telling me about the three parts. It has to be personal, it has to be contextual and it has to be conversational in terms of AI. What you saw yesterday during the keynote and what executives and the companies have been repeatedly saying is that's what Bixby is. And you could kind of say that's similar to what Google has with Google Assistant you can see that with Alexa but it's still very... Those technologies are very silent. >> What were those three things again? Personal, >> Personable, contextual, and conversational. >> That is awesome, in fact, that connects with what Amy Joe Kim, CEO of ShuffleBrain. She took it from a different angle; she's building these game apps but she's becoming more of a product development. Because it's not just build a game like a Zynga game or you know, something on a mobile phone. She's bringing gaming systems. Her thesis was people are now part of the game. Now those are my words but, she's essentially saying the game system includes data from your friends. >> Right. >> The game might suck but my friends are still there. So there's still some social equity in there. You're bringing it over to the contextual personal, this is the new magic for app developers. Is this leading to AR? >> Oh absolutely. >> I mean we're talking about ... This is the convergence of the new formulas for successful app development. >> Right, I mean we were talking about earlier what is AI and I mentioned all about data and it's absolutely true. Your home is collecting so much data about you that it's going to offer that personal response. So you're talking about is this going to lead to AR? Absolutely, so whatever data it has about your home you might bring your phone out as you go shopping or whatnot. You might be out sight-seeing and have your camera out. And it might bring back some memories, right or might display a photo from your photo album or something. So there's a lot of interesting ties that could come into it and obviously Samsung's camera on their phones are one of the top ones on the market. So there's potential for it, yeah. >> Sorry Ken, I've got to ask you. So looking at the bigger picture now let's look outside of Samsung. We can look at some tell signs here Google on stage clearly not grand-standing but doing their thing. Android, you know, AR core, starting to see that Google DNA. Now they've got tensor flow and a lot of goodness happening in the cloud with Sam Ramji over there kicking ass at Google doing a great job. Okay, they're the big three, some people call it the big seven I call it the big three. It's Amazon, Microsoft, Google. Everyone else is fighting for four, five, six. Depending on who you want to talk to. But those are the three, what I call, native clouds. Ones that are going to be whole-saleing resource. Amazon is not Google, Amazon has no Android. They dropped their phones. Microsoft, Joe Belfiore said hey I'm done with phones they tapped out. So essentially Microsoft taps out of device. They've still got the Xbox. Amazon tapping out of phones. They've got commerce. They've got web service. They've got entertainment. This is going to be interesting. What's your take? >> Well interesting is an under-statement there. I mean, you look at what the ... Amazon, right now, is basically running the show when it comes to virtual assistant or voice-powered assistance. Alexa, Amazon launched a bunch of Alexa products recently and then soon after, I believe it was the last month, Google launches a whole bunch of Google home devices as well. But what's interesting is that both of those companies are targeting... Have a different approach to what Samsung is, right? Remember Samsung's with Bixby 2.0 is all about consolidating the home, right? In my post I coined that it was basically their fight to unite the internet of things kind of thing. But, you know, when it comes to Alexa with Amazon and Google they're targeting not only the smaller integrations with maybe like August or SmartLocks or thermostats and whatnot but they're also going after retailers and businesses. So how many skills can you have on Alexa? How many, what are they called, actions can you have on Google Home? They're going after businesses. >> Well this is the edge of the network so the reason why, again coming back full-circle, I was very critical on day one yesterday. I was kind of like, data IoT that's our wheelhouse in TheCUBE. Not a lot of messaging around that because I don't think Samsung is ready yet and nor should they be given their evolution. But in Amazon's world >> I think they're ... The way they played it yesterday was pretty good a little humble, like they didn't set that expectation like oh my god this is going to >> They didn't dismiss it but they were basically not highlighting it right. >> Well they did enough. They did enough to entice you to tease it but like, look, they have a long way to go to kind of unite it. SmartThings has been around for a while so they've been kind of building it behind the scenes. Now this is like hey now we're going to slap on AI. It's similar to ... >> What do you hear from developers? I've been hearing some chirping here about AI it's got to be standardized and not sure. >> Oh, absolutely. I think a lot of developers will probably want to see hey if I'm going to build... If I want to leverage AI and kind of consolidate I want to be able to have it to maximize my input maximize my reach. Like I don't want to have to build one action here one service skill here. Whatever Samsung's going to call for Bixby. You know I want to make it that one thing. But Samsung's whole modernization that's going to be interesting in terms of your marketplace. How does that play out? You know, Amazon has recently started to monetize or start to incentivize, as it were, developers. And Google if they're not already doing that will probably has plenty of experience in doing that. With Android and now they can do that with Google. >> So I've got to ask you about Facebook. Facebook has been rumored to have a phone coming but I mean Facebook's >> Ken: They tried that once. >> They're Licking their wounds right now. I mean the love on Facebook is not high. Fake news, platform inconsistencies. >> Ken: Ad issues. >> Moves fast, breaks stuff. Zuck is hurting. It's hurting Zuck. Certainly the Russian stuff. I think, first of all, it's really not Facebook's fault. They never claimed to be some original content machine. They just got taken advantage of through bad arbitrage. >> It's gets it to some scale. >> People are not happy with Facebook right now so it's hard for them to choose a phone. >> Well, you're right. There are rumors that they were going to introduce the phone again after... We all remember Facebook Home which was, you know, we won't talk about that anymore. But I think there was talk about them doing a speaker some sort of video thing. I think they were calling it... I believe it's called Project Aloha. I believe Business ETC. and TechCrunch have reported on that extensively. That is going to compete with what Amazon's going. So everyone is going after Amazon, right. So I think don't discount Samsung on this part I think they are going to be I don't want to call them the dark horse but you know, people are kind of ignoring them right now. >> Well if Samsung actually aligned with Amazon that would be very because they'd have their foot in both camps. Google and Amazon. Just play Switzerland and win on both sides. >> Samsung, I think Samsung >> That might be a vital strategy. Kinesis if the customers wanted to do that. Google can provide some cloud for them, don't know how they feel about that. >> Yeah I mean Samsung will definitely be... I think has the appeal with their history they can go after the bigger retailers. The bigger manufacturers to leverage them because there's some stability as opposed to well I'm not going to give access to my data to Amazon you look at Amazon now as Amazon's one of the probably the de facto leader in that space. You see people teaming up with Google to compete against them. You know, there's a anti-Amazony type of alliance out there. >> Well I would say there's a jealousy factor. >> Ken: True, true. >> But a lot of the fud going out there... I saw Matt Asay's article in InfoWorld... And it was over the top basically saying that Amazon's not giving back an open source. I challenged Andy Jesse two years ago on that and Matt's behind the times. Matt you've got to get with the program you're a little bit hardcore pushed there. But I think he's echoing the fear of the community. Amazon's definitely doing open source first of all but the same thing goes for Ali Baba. I asked the founder of Ali Baba cloud last week when I was in China. You guys are taking open source what are you giving back and it was off the record comment and he was like, you know, they want to give back. So, just all kinds of political and or incumbent positions on open source, that to me is going to be the game-changer. Linux foundation, Hipatchi is growing, exponential growth in open source over the next five to ten years. Just in terms of lines of code shipped. >> Right. >> Linux foundation's shown those numbers and 10% of that code is going to be new. 90% of the code's going to be re-used and so forth. >> Ken: Oh absolutely. I mean you're going to need to have a lot of open source in order for this eco-system to really flourish. To build it on your own and build it proprietary it basically locks it down. Didn't Sony deal with that when they were doing, like, they're own memory cards for cameras and stuff and now their cameras are using SD cards now. So you're starting to see, I think, a lot of companies will need to be supportive of open source. In tech you start to see people boasting that, you know, we are doing this in open source. Or you know, Facebook constantly announces hey we are releasing this into open source. LinkedIn will do that. Any company that you talk to will... >> Except Apple. Apple does some open source. >> Apple does some open source, yeah. >> But they're a closed system and they are cool about it. They're up front it. Okay final question, bottom line, Samsung Developer Conference 2017 what should people know that didn't make it or are watching this, what should they know about what they missed and what Samsung's doing, what they need to do better. >> You know I think what really took the two-day conference is basically Bixby. You look at all the sessions; all about Bixby. SmartThings, sure they consolidated everything into the SmartThings cloud, great. But you know SmartThings has been around for a while and I'm interested to see how well they've been doing. I wish they released a little bit more numbers on those. But Bixby it was kind of an interesting 10 million users on them after three months launching in the US which is very is a pretty good number but they still have a bit of a ways to go and they're constantly making improvements which is a very good, good, good thing as well. >> Ken Yeoung, a friend of TheCUBE, tech reporter formerly with VentureBeat now onto his next thing what are you going to do? Take some time off? >> Take some time off, continue writing about what I see and who knows where that takes me. >> Yeah and it's good to get decompressed, you know, log off for a week or so. I went to China I was kind of off Facebook for a week. It felt great. >> Yeah. (laughs) >> No more political posts. One more Colin Kaepernick kneeling down during the national anthem or one more anti-Trump post I'm going to... It was just disaster and then the whole #MeToo thing hit and oh my god it was just so much hate. A lot of good things happening though in the world and it's good to see you writing out there. It's TheCUBE, I'm John Furrier, live in San Francisco, Samsung Developer Conference exclusive Cube coverage live here we'll be right back with more day two coverage of two days. We'll be right back.

>> Announcer: Live, from Orlando, Florida it's the Cube, covering Grace Hopper's Celebration of Women in Computing, brought to you by SiliconANGLE Media. >> Welcome back to the Cube's coverage of the Grace Hopper Conference, here at the Orange County Convention Center. I'm your host, Rebecca Knight. We're joined by Maureen Fan. She is the CEO and co-founder of Baobab Studio, which is the industry's leading VR animation studio, so, welcome Maureen. >> Thank you so much for having me. >> It's excited to talk to you, because you just won an Emmy. Congratulations. >> Thank you. >> You just won an Emmy for "Invasion", so, tell us a little bit about invasion. >> It was our first piece ever and it was just an experiment to see if we could even create VR and it's a story about these adorable little bunnies and you are actually a bunny too, you look down, you have a furry, little bunny body and these aliens that come to try to take over the Earth, with their advanced technology and you and your bunny friend end up saving the entire Earth and it's starring Ethan Hawk and it just came out last year. And we're really excited, because it became the number one top downloaded VR experience across all the headsets and it's getting turned into a Hollywood Feature Film. >> Very cool, very cool >> Thank you. >> And you have another film coming out too and this is "Rainbow Crow" >> Yes. >> Tell our viewers a little bit about "Rainbow". >> So, "Rainbow Crow" is based off of a Native American legend about how the crow used to have beautiful rainbow feathers and a beautiful singing voice and it's John Legend, in our piece and how he decides to sacrifice himself, by flying into the sun to bring warmth and fire back to the Earth and in the process, loses all his beautiful feathers, becomes black and burnt and his voice becomes like the crow's voice, but it's about how beauty is within and there's also, huge themes about diversity and how if you learn to accept yourself and your differences, that's when you can accept others and that's why we specifically cast minorities and women, so, we have John Legend, Constance Wu, from "Fresh off the Boat" as a skunk character, Diego Luna, from "Rogue One", for the moth character, as well as Randy Edmunds, as a Native American elder, narrator, and we have a whole bunch of other stars to announce, soon-- >> Well we cannot wait to hear. That's already an amazing line-up. >> Thank you. >> So, when you're thinking about "Rainbow Crow" and particularly, because it's VR, which is relatively new, still experimental, I mean, the messages of diversity, does it lend itself to VR, better than, say, a standard animation film? >> Absolutely, because if you think about stories that you just watch passively, the reason why we need stories and humanity, in general is to experience characters and stories beyond those we can experience in our real lives and we think, "Oh, how would I feel if I was in the "position of that character or what would I do?" but in VR, because you are actually playing a character in a role, you actually have to decide at that point, "what would I do?" so, it's not just a experience that I just see, it's one where I'm actively experiencing it, so, I create a memory and remember afterwards and there's all these research studies at Stanford by Jeremy Bailenson, who is head of the Stanford VR lab, that shows if you are made a homeless person, inside a VR experience and you have to go through a day in the life of a homeless person or you would look in the mirror and see that you are a black woman, that you, when you get out of the headset, you act completely differently. You have so much more empathy for these people than you would normally and so, it gets you to care about these characters, in a way that you don't normally and in VR, because you're doing it in a real-time game engine, these characters can act and react to what you do, so you can turn that empathy into action and actually act upon your caring, which we call compassion, so, it really changes you in a way, that normal, traditional story-telling doesn't, so, I think that having voices and characters that are different, in front of the screen, and also, behind the screen are really important to create role models and different perspectives for all the people out in the world. >> And these are movies that are targeted at kids, children, but do you see a future in which, where there is more targeted at adults, for VR? >> Absolutely. The funny thing is, in the beginning, the VR distributors didn't think that people would want our VR animation, because they're like, "Oh, it's just going to be these hardcore boys "that just love to play games. "Are they going to want this animation?" and VR is targeted towards adults, that's why they were surprised and we were surprised when "Invasion" became the number one downloaded VR experience. It shows that the audience for our content is from little kids to grandmas and everyone in between and that's probably why it became the top downloaded experience, is because it's universally appealing and has themes that are appealing to just, every single generation, so, absolutely, but for VR to become mainstream, there needs to be more universally appealing content. Right now, the content tends to be for games, like parkour games, as well as documentaries, which are two amazing pieces of content for this medium, but for it to become mainstream, we need more universally appealing content and I'm excited about, right now, it's a new industry. This is when minorities and women in particular, can enter the space and help shape the voices and the direction of the industry. >> That is exactly where I wanted to go next. So, let's talk a little bit about Baobab Studio. It's not that old and VR is not that old and so, why are there more opportunities, would you say, for women, and minorities? >> Well, if you look at traditional animation in the traditional entertainment fields that's a very mature industry and to break into that industry, you have to either have lots and lots of money or unfair distribution advantage, but VR, there's technological disruption, which means nobody has an advantage at all, means it's a level playing field and everybody can come in and start something, so, this is a perfect opportunity, when there's low barriers to entry of coming in, for women and minorities, anyone who wants their voice heard, to start companies or to make experiences and we can set the groundwork, because there's no one telling us what we can and can't do, because no one actually knows what we can and can't do yet. >> Right, right, but yet you are still of a female, asian figurehead of a studio, that will hopefully, someday be a major studio. You're working on it, but do you find that people take you as seriously in Hollywood? I mean, what are you coming up against? >> Well, it's really interesting, because I heard for even fundraising is one of the hardest parts of starting a company and there was a Stanford Research Study that showed that if you took a deck, a pitch deck for a company and you had a male voice-over versus a female voice-over the male voice-over was, I don't remember what, it was like 50% more likely to get funded than the woman with the same exact pitch deck, so I knew from that and they also show that if you are married and wear a ring you're taken more seriously, or if you're less attractive, also, you're taken more seriously and my hypothesis and some of the hypotheses out there, is it takes away the whole entire female attraction thing, like what does it mean to be an attractive female, so, I had to go into the meetings, knowing this. I even considered wearing a ring. I considered wearing a paper bag over my head. >> A bag over you head. Exactly, exactly. >> But at the same time I felt that I need to be myself and the best thing to, there's a correlation between the perceived leadership and confidence, that I needed to just go in there and be confident in myself so, I knew that, that could work against me, but I just needed to be myself, but I had to make sure that I was really confident and really believed in what I said and honestly, besides being confident and aggressive, I also, felt comfortable, because a lot of the people I talked to, I knew from my network and I had many of my male friends and female friends who knew these VC's, do the initial introduction, so I felt more comfortable going in, for them already knowing that I had somebody else saying that I was awesome. >> Yeah, and you've had many mentors and sponsors along the way too. >> Absolutely, I would say it's one of the most important things, for my career from the very beginning. When I graduated from business school, I actually emailed my mentors and said, "Here are the things I care about for finding a job." I didn't have to go find any jobs. They actually found all these jobs. for me, set up informational interviews, for me and I just went in and did it, all the informational interviews, got the offers and just choose one of them that I wanted to be in but, even for starting my company, my co-founder, Eric Darnell was a write and director of all four "Madagascar" films and I got introduced to him, through my mentor, Glen Entis who is the co-founder of PDI Dreamworks Animation and he was my mentor through Zynga and then, Gen Entis introduced me to Alvy Ray Smith, who is the co-founder of Pixar, who also became our advisor, Alvy Ray Smith, then introduced us to Glen Keane, who is the animator for "Little Mermaid", "Alaadin". >> The power of networks. >> It was all through the network and through my mentors that I found, a lot of the opportunities that I have and they also helped my through my personal life and how to navigate being entrepreneur and I rely on them so much. >> So, beyond finding the right mentor and sponsor what else would you give, your parting words to the young Maureen fans out there? >> I think there's a tendency for society to pressure you to conform, to money, fame, beauty and you don't need to listen to that and you don't need to be bucketed. I designed my own major at Stanford and with an eBay, I took four different roles. I just kept on creating my own roles and refusing to be bucketed as a creative or a suit and you can be who you are and create a category onto yourself and so, don't feel pressured to listen to what society is telling you. The other thing, is if you are faced with pushed back for being promoted and you feel like it's maybe because you're a woman, we have a tendency as women to start blaming ourselves and thinking there's something wrong with us, versus research shows men are most likely to blame the system, don't let it affect you and bring you down, because you need to actually be confident and believe in yourself in order to rise above. >> Great. Great advice. Maureen, it's been a pleasure having you on the show. Thanks so much. >> Thank you. >> And best of luck to you. >> Thank you, so much. >> Hope you win another Emmy. >> Thank you. >> Come back and talk to us again. >> Thank you. I'm Rebecca Knight, we'll have more from Grace Hopper, just after this. (techno music)

(upbeat music) >> Hey welcome back to VMWorld 2013. This is theCUBE, flagship program. We go out to the events to extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm joined with David Vilante, my co-host from Wikibon.org and we're kicking off today with an awesome interview. CEO of VMWare, Pat Gelsinger, CUBE Alumni. Been on the theCUBE with Dave and I multiple times. So many times. You are in like the leaderboards. So in terms of overall guest frequency, you've been up there, but also you're also the top dog at VMWare and great to see you again. How are you feeling? >> Thank you, thank you. Good morning, guys. >> Pleasure. >> Good to see you. >> So what's new? I mean obviously you're running the show here. You're running around. Last night you were at the NetApp event. You ran through CIO, R&D. You got to go out and touch all the bases out here. >> Yeah, yeah. >> What does that look like? What have you done and obviously, you did, the key note was awesome. What else is going on? >> You know, everything, you know, VMWorld is just, it's just overwhelming, right? I mean 23,000 people almost. I mean you know the amount of activities around that and it really has become the infrastructure event for the industry and you know, if you're anything related to infrastructure, right, what's going on, right in the enterprise side of IT, you got to be here, right? And there's parties everywhere. Every vendor has their events. Every you know, different particular technology area, a bunch of the things that we're doing, and of course to me, it's just delightful that I can go touch as many people and you know, they get excited to see the CEO. I have no idea why, but hey I get to show up. It's good. >> You've been in the industry for a long time. Obviously you've seen all the movies before and we've talked about the seas of change in the EMC world when you were there, but we had two guests on yesterday that were notable. Steve Herrod who's now a venture capitalist at Generalcatalyst and Jerry Chen who's a VC at Graylock, and we have a 10-year run here at VMWare which is esteemed by convention, but the first five years were a lot different than the last five years, and certainly, the last year you were at the helm. So what's changed in the past 24 months? A lot of stuff has certainly evolved, right? So the Nicira acquisition certainly changed up, changed everything, right? You saw software-defined data center now come into focus this year, but really, just about less than 24 months, a massive kind of change. What, how do you view all that? How do you talk to your employees and the customers about that change? >> Well you know, as we think about the software-defined data center vision, right, it is a broad comprehensive powerful vision for rearchitecting how the data center is operated, how customers take advantage of it. You know and the results and the agility and efficiency that comes from that. And obviously the Nicira acquisition is sort of the shot heard 'round the world as the really, "Okay, these guys are really serious "about making that happen." And it changes every aspect of the data center in that regard. You know and this year's VMWorld is really, I'll say, putting the beef on the bones, right? We talked about the vision, we talked about each of the four legs of it: compute, networking, storage and management of automation. So this year it's really putting the beef on the bones and the NSX announcement, putting substance behind it. The vSAN announcement, putting substance behind it. The continuing progress of management and automation. And I think everything that we've seen here in the customer conversations, the ecosystem of partner conversations are SDDC is real. Now get started. >> Can you, I think you've had some fundamental assumptions in that scenario, particularly around x86 in the service business. Essentially if I understand it, you've said that x86 will dominate that space. You're expecting status quo in the sense that it will continue to go in the cadence of you know, cores and Moore's Law curve even though we know that's changing. But that essentially will stay as is and it's the other parts, the networking and the storage piece that you're really, where you define conventions. Is that right? >> Yeah certainly we expect a continuing momentum by the x86 by Intel in that space, but as you go think about software-defined everything in the data center really is taking the power of that same core engine and applying it to these other areas because when we say software-defined networking, right, you need a very high packet flow capability and that's running a software on x86. We need to talk about data services running in software, right? You need high performance. It's snapshots, file systems, etc. running on software, no longer bound to you know physical array. So it really is taking that same power, that same formula right, and applying it to the rest of the elements of the data center and yeah, we're betting big right, that that engine will continue and that we'll be successful in being able to deliver that value in this software layer running on that core powerful Silicon engine. >> So Pat, so obviously when you came on board, the first thing you did was say, "Hey, the pricing. "I want to change some things." Hyper-Visor's always been kind of this debate. Everyone always debates about what to do with Hyper-Visor. But still, virtualization's still the enabling technology so you know, you kind of had this point where the ball's moving down the field and all of a sudden, in 2012, it changed significantly, and that was a lot in part with your vision with infrastructure. As infrastructure gets commoditized, what is going to change in the IT infrastructure and for service providers, and the value chains that's going to be disrupted? Obviously economics are changing. What specifically is virtualization going to do next with software defined that's going to be enabling that technology? >> Yeah, you know and I, you know, we're not out to commoditize. We're out to enable innovation. We're out to enable agility, right, and then the course of that, it changes what you expect and what the underlying hardware does. But you know, it's enabling that ecosystem of innovation is what we're about and customers to get value from that and as you go look at these new areas, "Hey, you know, we're changing how you do networking." Right, all of a sudden, we're going to create a virtual network overlay that has all of these services associated with it that are proficient just like VMs in seconds. We're creating a new layer of how storage is going to be enabled. You know, this policy-driven capability. Taking those capabilities that before were tightly bound to hardware, delivering it through the software layer, enabling this new magnificent level of automation and yesterday's demo with Carl. I mean Carl does a great CTO impersonation, doesn't he? And he's getting some celebrity action. He's like, "I got the bottle." >> Oh yeah. >> Steve Herrod gave him a thumbs up too. >> Yes, yeah Steve gave him a good job. But you know, so all of those pieces coming together, right, is you know, really, and you know, just the customer and the ecosystem response here at the show has been, "Oh, you know, right, "SDDC, it's not some crazy thing out there in the future. "This is something I can start realizing value for now." >> Well it's coming into focus. It's not 100% clear for a lot of the customers because they're still getting into the cloud and the hybrid cloud, I call it the halfway house to kind of a fully evolved IT environment, but you know. How do you define? >> No it is the endgame. Hyper cloud is not a halfway house. What are you talking about? What are you talking about? >> To to full all-utility computing. That is ultimately what we're saying. >> Halfway house? >> I don't mean it that way. (group laughs) >> Help me. >> Okay next question. >> (chuckles) When you're in a hole, stop digging, buddy. >> So how do you define the total adjusted mark at 50 billion that Carl talked about? >> Yeah you know, as we looked at that, we said across the three things, right that we said, software-defined data center, 28 billion dollars; hyper cloud, 14 billion; eight billion for the end-user computing; that's just 50 billion opportunity. But even there, I think that dramatically understates the market opportunity. IT overall is $1.7 trillion, right? The communications, the services, outsourcing, etc. And actually the piece that we're talking about is really the underpinnings for a much larger set of impact in the part of what applications are going to be developed, how services are delivered, how consumers and businesses are able to take advantage of IT. So yes, that's the $50 billion. We'll give you the math, we'll show you all the details of Gartner's and IDC's to support it. But to us, the vision and the impact that we're out for is far more dramatic than that would even imply. >> Well that's good news because we said to Carl, "It's good that your market cap is bigger than--" (Pat laughs) >> Oh yeah your TAM is bigger than your market cap. Well okay now we-- >> Yeah, that's nice, yeah. Yeah, we're out to fix the market cap. >> Yeah he said, "Now we got to get the 50 billion. So I'm glad to hear there's upside to the TAM. But I wanted to ask you about the ecosystem conversation. When you talk about getting things like you know, software defined network and software defined source, what's the discourse like in ecosystem? For guys like, let's take the storage side. EMC, NetApp last night, they say, "Hey you know, software defined storage. "We really like that, but we want to be in that business." so what, talk about that discussion. >> Yeah, clearly every piece of software defined, whether it's software defined storage, software defined data services, software defined security services or networking, every piece of that has ecosystem implications along the way. But if you go talk to a NetApp or a EMC, they'd say, "You're an appliance vendor." And they would quickly respond and say, "No, our value's in software, "and we happen to deliver it as an appliance." And we'd say, "Great, let's start delivering "the software value as a software appliance "through virtualization and through the software delivery "mechanisms that we're talking about for this new platform." Now each one of them has to adjust their product strategies, their, you know, business strategies to enable those software components, right, independent of their hardware elements for full execution and embodiment into the software-defined data center feature. But for the most part, every one of them is saying, "Yes, now how do we figure out how to get there, "and how do we decompose our value, embody it it in new ways "and how can we enable that in "this new software-defined data center vision?" >> And they've always done that with software companies. I mean certainly Microsoft and Oracle have always grabbed a piece of the storage stack and put it into their own, but it's been very narrow, within their own spaces, and of course, VMWare is running any application anywhere. So it's more of a general purpose platform. >> Absolutely. >> Is it a tricker fit for the ecosystem to figure out where that white space is? >> Absolutely. Every one of them has to figure out their strategy. If you're F5, you know, I was with John McAdam this morning. "Okay, how do I take my value?" And you would very quickly say, "Hey, our value's in software. "We deliver it as mostly as appliances, "but how do we shift, you know, your checkpoint?" Okay, you know, they're already, right, you know, our largest software value or Riverbed, you know, the various software vendors and security as well. Each one of them are having to rethink their strategies and the context of software define. Our customers are saying, "Wow, this is powerful. "The agility and the benefits that I get from it, "they're driving them to go there." >> So what's the key to giving them confidence? Is it transparency? You're sharing roadmaps during integration? >> Yes, yes, yes. >> Anything else? Am I missing anything there? >> You know, also how we work with them and go to market as well. You know, they're expecting from us that, okay, "you know, if this is one of our accounts, "come in and work with us on those accounts as well." So we do have to be transparent. We have to the APIs and enable them to do integration. We have to work with them in terms of enabling their innovation and the context of this platform that we're building. But as we work along the way, we're getting good responses to that. >> Pat, how do you look at the application market? Now with end-user computing, you guys are picking that up. You got Sanjay Poonen coming in and obviously mobile and cloud, we talked about this before on theCUBE, but core IT has always been enabling kind of the infrastructure and then you get what you get from what you have in IT. Now the shift is, application is coming from outside IT. Business units and outside from partners, whether they're resellers. How do you view that tsunami of apps coming in that need infrastructure on demand or horizontally scalable at will? >> Yeah so first point is, yes, right, we do see that, you know, as infrastructure becomes more agile and more self provisioned, right, more aligned to the requirements of applications, we do see that it becomes a tsunami of new applications. We're also working very hard to enable IT to be the friend of the line of business. No longer seen as a barrier, but really seen as a friend, partner enabler of what they're trying to do because many of the, you know, line of businesses have been finding way. You know, how do I get around the slow-moving IT? Well we want to make IT fast-moving and enabling to meet their security, governance, SLA requirements while they're also enabling these powerful new applications to emerge and that to us is what infrastructure is all about for the future is enabling, you know, businesses to move at the speed of business and not have infrastructure being a limiter and as we're doing things, you know, like the big data announcements that we did, enabling infrastructure that's more agility, you see us do more things in the AppDev area over time, and enabling the management tools to integrate more effectively to those environments. Self-service portals that are enabling that and obviously with guys like Sanjay in our mobile initiative, yeah that's a big step up. Don't you like Sanjay? He's a great addition to the team. >> Yeah Sanjay's awesome. He's been great and he has done a lot on the mobile side. Obviously that is something that the end users want. >> That's an interesting way that I put him into that business group first. (group chuckles) >> Well on the Flash side, so under the hood, right? So we look under the hood. You got big data on the dashboard. Everyone's driving this car to the new future of IT. Under the hood, you got Flash. That's changing storage a bit and certainly reconfiguring what a DaaS is and NaaS and SaaS and obviously you talked about vSAN in your key note. What is happening, in your vision, with compute? I mean obviously as you have more and more apps hitting IT, coming in outside core IT but having to be managed by core IT, does that change the computing paradigm? Does it make it more distributed, more software? I mean how do you look at that 'cause that's changing the configuration of say the compute architecture. >> Sure and I mean a couple of things, if you think about the show here that we've done, two of them in particular in this space, one is vSAN, right? A vSAN is creating converged infrastructure that includes storage. Why do you do that? Well now you have storage, you know, apps are about data, right? Apps need data to operate on so now we've created an integrated storage tier that essentially presents an integrated application environment in converged infrastructure. That changes the game. We talked about the Hadoop extension. It changes how you think about these big data applications. Also the Cloud Foundry announcement. Right on/off premise of PaaS layer to uniquely enable applications and as they've done that on the PaaS layer, boy, you don't have to think about the infrastructure requirements to deploy that on or off premise or increasingly as I forecast for the future, hybrid applications, born in the hybrid, not born in the cloud, but born in the hybrid cloud applications that truly put the stuff that belongs on premise on premise, puts the stuff that belongs on the cloud in the cloud, right and enables them to fundamentally work together in a secure operational manner. >> So the apps are dictating through the infrastructure basically on demand resources, and essentially combine all that. >> Absolutely. Right. The infrastructure says, "Here's the services "that I have already, right, in catalogs "that you can immediately take advantage of, "and if this, you fit inside "of these catalogs, you're done." It's self-provisions from that point on and we've automated the operations and everything to go against that. >> So that concept of "born in the hybrid" is a good one. So obviously that's your sweet spot. You're going from a position. >> Yeah and this stupid halfway house hybrid comment. I mean I've never heard something so idiotic before. >> One person, yeah. (group chuckles) >> I don't know, it was probably an Andreessen comment or something, I don't know. (group chuckles) >> He's done good for himself, Marc Andreessen. >> Google and Amazon are obviously going to have a harder time with that, you know, born in the hybrid. What about Microsoft? They got a good shot at born in the hybrid, don't they? >> Yeah, you know and I think I've said the four companies that I think have a real shot to be you know, very large significant players for public cloud infrastructure services. You know, clearly Amazon, you know Google, they have a large, substantive very creative company. Yeah Microsoft, they have a large position. Azure, what they've done with Hyper-V and ourselves, and I think that those, you know the two that sort of have the natural assets to participate in the hybrid space are us and Microsoft at that level, and obviously you know we think we have lots of advantages versus Microsoft. We think we're miles ahead of them and SDDC, right, we think the seamlessness and the compatibility that we're building with one software stack, not two. It's not Azure and Hyper-V. It is SDDC in the cloud and on premise that that gives us significant advantages and then we're going to build these value rate of services on top of it, you know, as we announced with Desktop as a Service, Cloud Foundry as a Service, DR as a service. We're going to quickly build that stack of capabilities. That just gives substantial value to enterprise customers. >> So I got to ask you, talk about hybrid since you brought it up again. So software defined data center software. So what happens to the data center, the actual physical data center? You mentioned about the museum. I mean what is it going to look like? I mean right now there's still power and cooling. You're going to have utility competing with cloud resources on demand. People are still going to run data centers. >> You're talking about the facility? >> Yeah, the actual facility. I'm still going to have servers. This will be an on premise. Do you see that, how do you see that phasing out to hybrid? What does that look like physically for someone to manage? Just to get power, facility management, all that stuff. >> Yeah and in many ways, I think here, the you know, the cloud guys, Googles and Amazons and Yahoos and Facebooks have actually led the way in doing some pretty creative work. These things become you know, highly standardized, highly modularized, highly scalable, you know, very few number of admins per server ratio. As we go forward, these become very automated factories, right, of cloud execution. Some of those will be on premise. Some of those will be off premise. But for the most part, they'll look the same, right, in how they operate and our vision for software defined data center is that software layer is taking away the complexity, right, of what operates underneath it. You know, they'll be standardized, they'll be modularized. You plug in power, you plug in cooling, you plug in network, right, and these things will operate. >> Basically efficient down to the bone. >> Yeah. >> Fully operated software. >> Yeah and you know, people will decide what they put in their private cloud, you know, based on business requirements. SLAs, you know, privacy requirements, data governance requirements, right? I mean in Europe, got to be on premise in these locations and then they'll say, "Put stuff in the public cloud "that allows me to burst effectively. "Maybe a DR because I don't do that real well. Or these applications that belongs in the cloud, right because it's distributive in nature, but keep the data on premise. You know, and really treat it as a menu of options to optimize the business requirements between capex to opex, regulatory requirements, scale requirements, expertise, mission critical and all of those things then are delivered by a sustainable position. Not some stupid hybrid halfway house. A sustainable position that optimizes against the business requirements that they have. >> Let me take one of those points, SLA. Everybody likes to attack Amazon and its SLAs, but in many regards. >> Yeah, I'm glad I got your attention. >> Yeah, that's good, we're going to come back to that John. (group chuckles) >> In my head right now. >> I don't think we're done with that talk track. (laughs) So it's easy to attack Amazon and SLAs, but in essence, the SLA is, to the degree of risk that you're willing to take and put on paper at scale. So how transparent will you be with your SLAs with the hybrid cloud and you know, will they exceed what Amazon and Google have been willing and HP for that matter have been willing to promise at scale? >> Oh yeah, absolutely. I mean we're going to be transparent. The SLAs will have real teeth associated with them, you know, real business consequences for lack of execution against them. You know, they will be highly transparent. You know, we're going to have true, we're going to measure these things and you know, provide uptime commitments, etc. against them. That's what an enterprise service is expected, right? At the end of the day, that's what enterprises demand, right? When you pick up the phone and need support, you get it, right. And in our, the VMWare support is legendary. I'm just delighted by the support services that we offer and the customer response to those is, "Hey you fixed my problem even when "it wasn't your problem and make it work." And that's what enterprise customers want because that's what they have to turn around and commit back to their businesses against all of the other things as well. You know, regulatory requirements, audit requirements, all of those types of things. That's what being an enterprise provider is all about. >> John wants to get that. Talk about public cloud. (Pat laughs) >> I want to talk about OpenStack because you guys are big behind OpenStack. You talk about it as a market expansion. Internally what are some of the development conversations and sales conversations with customers around OpenStack instead of status, what's it doing, how you guys are looking at that and getting involved? >> Yeah, you know, we've clearly said you know, that you have to think about OpenStack in the proper way. OpenStack is a framework for building clouds, and you know, for people who are wanting to build their own cloud as opposed to get the free package cloud, right, you know, this is our strategy to enable those APIs, to give our components to those customers to help them go build it, right and those customers, largely are service providers, internet providers who have unique scale, integration and other requirements and we're finding that it's a good market expansion opportunity for us to put our components in those areas, contribute to the open source projects where we truly have IP and can differentiate for it like at the Hyper-Visor level, like at the right networking layer and it's actually going pretty well. You know, in our Q2 earnings call, you might recall, you know, I talked about that our business with the public OpenStack customers was growing faster than the rest of our business. That's pretty significant, right, to say, "Wow, if it's growing faster, "that says the strategy is working." Right, and we are seeing a good response there and clearly we want to communicate. We're going to continue that strategy going forward. >> And the installed base of virtualization is obviously impressive and the question I want to ask you is how do you see the evolution of the IT worker? I mean they have the old model, DBA, system admins, and then now you have data science on the big data side so with software defined data center, the virtualization team seems to be the center point for that. What roles do you see changing with hybrid cloud and software defined data center and user computing? >> Well I think sort of the theme of our conference is defy convention. Right and why do we do that? Because we really see that the, you know, the virtual admin and the virtual infrastructure that they have really become the center of IT. Now we need the competence of networking, the security guys, the database guys, but that now has to happen in the context, right, of a virtualized environment. DBA doesn't get to control his unique infrastructure. The Hadoop guy doesn't get his own unique infrastructure. They're all just workloads that run on this virtualized infrastructure that is increasingly adept and adaptable, right, to these different workload areas and that's what we see going forward as we reach into these new areas and the virtual admin, he has to go make best buddies with the networking guy and say, "Let me talk to you about virtual networking "and how we're going to cross between the virtual overlay "domain and the physical domain and how these things "are going to stitch together for making your job better "right, and delivering a better solution "for our line of business and for our customers." >> One thing you did to defy convention is get on stage with Marc Andreessen. So I want to talk about that a little bit. You guys had I would call it, you know, slight disagreements and, into the future. >> Just a little. >> But I thought you were kind to him. And he said, you know, "No startup that I work with "is going to buy any servers." And I thought you were going to add, no never mind. I won't even go there. (group laughs) I won't even go there, I want to be friends. No so talk about that a little bit, that discussion that you had. Your view of the world and Marc's. How do you respond to that statement? Do they grow up into VMWare customers? Is that the obvious answer? >> I mean I have a lot of regard. You know, Marc and I have known each other for probably close to two decades now and you know, we partnered and sparred together for a long time and he's a smart, successful guy and I appreciate his opinions. You know, but he takes a very narrow view, right, of a venture seed fund, right, who is optimizing cashflow, and why would they spend capital on cashflow when they can go get it as a service? That's exactly the right thing for a very early stage startup company to do in most cases, right? Marc driving his customers to do that makes a lot of sense, but at the end of the day, right, if you want to reach into enterprise customers, you got to deliver enterprise services, right? You got to be able to scale these things. You got to be cost-effective at these things and then all the other aspects of governance, SLAs, etc. that we already talked about. So in that view, I think Marc's view is very perspective. >> Also Zynga and those guys, when they grew up on Amazon, they went right to bare metals as soon as they started scale. >> They had to bring it back in right 'cause they needed the SLAs, they needed the cost structures. They wanted to have the controls of some of those applications. >> And rental is more expensive at the end of the day. >> There you go. Somebody's got to pay the margins, right, you know, on top of that, to the providers so you know, I appreciate the perspective, but to me it is very narrow and periconchal to that point of view and I think the industry is much broader and things like policy and regulation are going to take decades, right? Not years, you know, multiple decades for these things to change and roll out to enable us a mostly public cloud world ever, right, and that's why I say I think the hybrid is not a waystation, right? It is the right balance point that gives customers flexibility to meet their business demands across the range of things and Marc and I obviously, we're quite in disagreement over that particular point. >> And John once again, Nick Carr missed the mark. We made a lot of money. >> I think Marc Andreessen wants to put a lot of money into that book. Everyone could be the next Facebook where you you know, you build your own and I think that's not a reality in enterprise. They kind of want to be like Facebook-like applications, but I wanted to ask you about automation. So we talked to a lot of customers here in theCUBE and we all asked them a question. Automation orchestration's at the top of the stack. They all want it, but they all say they have different processes and you really can't have a general purpose software approach. So Dave and I were commenting last night when we got back after the NetApp event was you know, you and Paul Murray were talking in 2010 around this hardened top when you introduced that stack and with infrastructure as a service, is there a hardened top where functionality is more important than which hardware you buy so you can enable some of those service catalogs, some of those agility features in automation because every customer will have a different process to be automated. >> Yeah. >> And how do you do that without human intervention? So where is that hardened top now? I mean is it platform as a service or is it still at the infrastructure as a service model? >> Yeah, I think clearly the line between infrastructure as a service and platform as a service will blur, right, and you know, it's not really clear where you can quite draw that line. Also as we make infrastructure more application aware, right, and have more application development services associated with it, that line will blur even more. So I think it's going to be hard to call, you know, "Here's that simple line associated with it." We'd also argue that in this world that customers, they have heterogeneous tools that they need to work with. Some will have bought in a big way into some of the legacy tools and as much as we're going to try help them move past some of those brittle environments, well that takes a long time as well. I'd also say that you know, it's the age of APIS, not UIs, and for us it's very much to expose our value through programmatic interfaces so customers truly can have the flexibility to integrate those and give them more choice even as we're trying to build a more deeply integrated and automated stack that meets a general set of needs for customers. >> So that begs the question, at the top of the stack where end user computing's going to sit and you're going to advance that piece, what's, what's the to do item for you? What needs to happen there? Is it, on a scale of one to 10, 10 being fully baked out, where is it, what are the white spaces that need to be tweaked either by partners or by VMWare? >> Yeah and I think we're pretty quickly finishing the stack with regard to the traditional PC environments and I think the amount of work to do for the mobile environment is still quite enormous as we go forward and in that, you know, we're excited about Horizon getting some good uptake, a number of partner announcements this week, but there's a lot to be done in that space because people want to be able to secure apps, provision apps, deprovision apps, have secure work spaces, social experiences, a rich range of integrations to the authentication devices associated with it to be able to have applications that are developed in that environment that access this hybrid infrastructure effectively over time, be able to self-compose those applications, put them into enterprise, right, stores and operations, be able to access this big data infrastructure. There's a whole lot of work to be done in that space and I think that'll keep us busy for quite a number of years. >> This is great. We're here with Pat Gelsinger inside theCUBE. We could keep rolling until we get to the hook, but a couple more final questions is the analogy of cloud has always been like the grid, electricity. You kind of hinted to this earlier. I mean is that a fair comparison? The electricity's kind of clean and stable. We have an actual national grid. It doesn't have bad data and hackers coming through it so is that a fair view of cloud to kind of look, talk about plugging electricity in the wall for IT. >> I think that is so trite, right? It came up in the panel we had with Andreessen, Bechtolsheim, Graeme, and myself because you know, it's so standardized. 120 volts AC right and hey you know, maybe it gets distributed as four, 440, three phase, but you know, it is so standardized. It hasn't moved. Sockets standards, right, you're done. Think how fast this cloud world is evolving. Right the line between IA as in PaaS as we just touched upon, the services that are being offered on top of it. >> Security, security. >> Yeah, yeah, all these different things. To me, it is such a trite, simple analogy that has become so used and abused in the process that I think it leads people to such wrong conclusions right, about what we're doing and the innovation that's going on here and the potential that we're going to offer. So I hope that every one of our competitors takes that and says, "That's the right model." Because I think it leads them to exactly the wrong conclusion. >> I couldn't agree more. The big switch is a big myth. I wanted to get tactical for a minute. I listened to your conference calls. I can't wait to read the transcript. I just go, I got to listen to the calls, but just observing those and the conversations around here, I just wanted to ask you. I always ask CEOs, "What keeps you up at night?" They always say execution so let's focus on execution in the next 12 to 18 months. I came up with the following. "To maintain dominance in vSphere, "get revenue beyond vSphere, "broaden end user license agreements, "increase end user computing adoption "and proof points around hybrid cloud." Are those the big ones? Did I miss anything? >> That's a good list. >> Yeah? >> That's a good list. >> So those are the things an observer should watch in let's say 12 to 18 months of indicators of success and of what you're doing and what you're driving. >> Yeah and you know, clearly inside of that, with SDDC, obviously we think this environment for networking, right, and what we've really, I'll say delivered that. That would be one in particular inside of that category that we would call out you know, with regard to our hybrid cloud strategy. It's clearly globalizing that platform. Right, we announced Savvis here, but we need to make this available on a global basis. You go to an enterprise customer and they're going to say, "I need services in Japan, I need services in Singapore. "I need to be able to operate in a global basis." So clearly having a platform, building out the services on top of it is another key aspect of building those hybrid user cases and more of the value on top of it and then in the EUC space, we touched a bit on the mobile thing already. >> So we'll have Martin on later, but his PowerPoint demonstration. >> What a rockstar, what a rockstar. >> He is a rockstar and we've had him on before. He's fantastic, but his PowerPoint demonstration is very simple, made it seem so simple. It's not going to be that easy to virtualize the network. Can you talk about the headwinds there and the challenges that you have and the things that you have to do to actually make progress there and really move the needle? >> Yeah it really sort of boils down in two aspects. One is we are suggesting that there will be a software layer for networking that is far more scalable, agile and robust than you can do in a physical networking layer. That's a pretty tall order, right? I need to be able to scale to tens, hundreds, millions of VMs, right? I need to be able to scale to terabytes of cross-sectional packet flow through this. I need to be able to deliver services on top of this, right, that truly allow firewalls, load balancers, right, IDSes, all of those things to be agile, scale. Yeah, it is ambitious. >> Ambitious. >> This is, right, the most radical, architectural statements in networking in the last 20 or 30 years and that's what gets Martin passionate. So there's a lot of technical scale and we really feel good about what we've done, right, but being able to prove that with robust scalability, right, for which like the Hyper-Visor, it is more reliable than hardware today, in being able to make that same statement about NSX that just like ESX, it is better than hardware, right, in terms of its reliability, its resilience. That's an important thing for us to accomplish technically in that space, but then the other pieces, showing customer value, right? Getting those early customers and what a powerful picture. GE, Citigroup and eBay, right? It's like wow, right? These are massive customers, right, and being able to prove the value and the use cases in the customer settings, right, and if we do those two things, you know, we think that truly we all have accomplished something very very special in the networking domain. >> Pat, talk about the innovation strategy. You've been now a year under your belt at VMWare and you were obviously with EMC and Intel and we mentioned on theCUBE many times, cadence of Moore's Law was kind of the culture of Intel. Why don't you tell us about the innovation strategy of VMWare going forward, your vision, but also talk about the culture and talk about the one thing that VMWare has from a culture that makes it unique and what is that unique feature of the VMWare culture? >> We spent time as a team talking about what is it that drives our innovation, that drives our passion, and clearly as we've talked about our values as a team, it is very much about this passion for technology and passion for customers and how those two coming together, right, with fundamental disruptive "wow" kind of technologies where people just say, like they did when they first used ESX and they say, "Wow, I just didn't ever envision "that you could possibly do that." And that's the experience that we want to deliver over and over again, right, so you know, hugely disruptive powerful software driven virtualization technologies for these domains, but doing it in a way that customers just fall in love with our technologies and you know as, I got a note from Sanjay and I just asked him, "You know, what do you think of VMWorld?" And he said, right, "It is like a cult geek fest." Right, because there's just this deep passion around what people do with our technology, right, and they're not even at that point, they're not customers, they're not partners. They are deeply aligned passionate zealots around what we are doing to make their lives so much more powerful, so much more enabled, right, and ultimately, a lot more fun. >> People say it's like being a car buff. You know, you got to know the engine, you want to know the speeds and feeds. It is a tech culture. >> Yeah, it is absolutely great. >> Pat, thanks for coming on theCUBE. We scan spend a lot of time with you. I know we went a little over. I appreciate your time. Always great to see you. >> Great to see you too. >> Looking good. >> Thank you for that. >> Tech Athlete Pat Gelsinger touching all the bases here. We saw him last night at AT&T Park. Great event here, VMWare World 2013. This is theCUBE. We'll be right back with our next guest after this short break. Pat Gelsinger, CEO on theCUBE.

okay we're back this is Dave vellante Wikibon organ this is the cube where we go out to the events we extract the signal from the noise we bring you the best guests that we can find we like to call them Tech athletes I'm here with my co-host Jeff Frick Doug Leone is here he's a partner at Sequoia Capital very well-known VC on the board of service now Doug welcome to the cube >> thank you so today here >> here you know a lot of times venture >> it's great to have you capitalists they'll get in they'll help see the company's help grow the company's go to go to an IPO successful IPO and kind of go on to the next one so you're here and you're seeing the growth of this company the meteoric rise and your see this user conference you must be delighted to see the the degree the enthusiasm of the user base it's very exciting >> it's very exciting to be here and see close to 4,000 people being here and hearing some other feedback from the customers terrific >> so how is it that that they've been able to keep you interested in in this journey and you know you're still here you're helping you know grow the company >> the short answer is that the job is not well I think done yet we we are in the early innings if one thinks about IT service management we're well on our way but one thing we learned from the conference is that customers are finding many use cases for the software and the software is spreading in IT, in HR in many other areas so I actually think we're in the early innings and so I think there's a great deal of opportunities for the company and I would like to very much try to help in garner as much market share in that opportunity as we can >> been around the technology industry for >> yeah you've a while why is it if you feel that I t is now ready to change >> well i think it's-- ready to change for the simple reason that the world has changed if you think of IT maybe four or five years ago essentially what the role of IT was a defensive role to protect the enterprise and the employees and the technology were enclosed in  four walls and a little bit on the tax side where no was the first answer and yes was the other answer and they work mainly in infrastructure I think our that is the plumbing well suddenly the the role of the CIO is completely changed the defensive part of the house has become much more challenging that technology is out of the building and the employees are out of the building so that requires a lot more skill set and it's way more exciting and the plumbing side of the house is completely change where the CIO is no longer the plumber is a business partner so his role has been elevated within the corporation and I think it's the most exciting time to be a CIO in a history of CEOs so I think that the future is very bright for this market segment lastly for the very first time the IT function touches every employee in a company and so that there's a lot to be done for every employee >> we talk a lot on the cube about the whole hyperscale trend and people I colleague John first is if you want to know what's going to happen in the enterprise five years from now go look at what's happening at you know Google and Facebook and Amazon and you remember after the calm crash and Nick Carr wrote his famous book does IT matter everybody just pulled back like you said got defensive but the hyperscale crowd showed us that technology actually can be used to create competitive advantage nonetheless a lot of traditional IT has continued to be defensive do you think that platforms like ServiceNow can actually change that mindset and bring IT back to being a competitive advantage and also importantly catalyze increased spending within IT >> would take it one step further I think  well I actually that companies like service now offer a product that are extremely necessary for IT to change I don't think it can be done with our ServiceNow for the very first time we have employees that can create applications on the fly that can create application many applications that talk to one another in a single type of a data model therefore the ERP for IT and instead of the end uses having to wait weeks months for any changes that can be done very quickly very overnight by a user so I think having learned a little bit from amazon and from Google in the expectations of the end user within a corporation's a company like ServiceNow now offers a solution where companies can make those kinds of changes and build those kinds of systems very very quickly >> so Doug I wonder if you could talk from step back from kind of a VC perspective where we saw a few years back you know tremendous investment and valuation creation in Facebook's and and Google of course and a lot of consumer facing buzz Zynga and this and that and now you know it seems to kind of shift it back to the enterprise side but I think what's what's interesting is how the consumerization and those applications both in infrastructure as well as user experience seem to really now be influencing where the enterprise side of the house is going you speak this >> sure please keep in mind that the business of investing in these small companies is a business of latency if you invest in one year products on the market for two years later and consumer adoption is three or four years later and unfortunately the venture industry tends to run with momentum investing so 50,000 venture guys do consumer 50,000 venture guys do infrastructure and IT I think the good investors have seen some of these trends just begin to evolve four or five years ago and we you have to be quite consistent and be true to your vision if you start coming in to companies in infrastructure right now one could argue that you're investing at a local maximum maybe four or five years ago but unfortunately in the investment industry is momentum driven industry for most investors and you know the thing that happens with momentum you're always a little late i'm paying the highest price and then the moment that you get there that you see a peak so i think the trick is to have careful market maps have a clear vision and then have dumbo like ears available to listen to guys like Fred Luddy so when you run across them and they have a crystal-clear vision of the future you're ready to jump on him for the simple reason you've thought I had and maybe it was one of your veins of your market maps >> What was it  when you first talked to Fred that really struck to you what was the vision that resonated >> I think two or three things one he was crystal clear in what he wanted to do and the great founders are crystal clear because they are great thinkers they spend all the time thinking and therefore when you spend a lot of time thinking then what you can do is articulate in very few words second Fred knew exactly as the founder in very few words of the company what is strengths were and what his strengths were not or his weaknesses were and he asked some of his trusted friends investors and colleague to help them find people to shore up the other side and third he just told it like it is no surprises as a matter of fact for every board meeting we went to  for the first year and a half the only surprises we got was surprised on the upside and I will tell you that never happens >> Doug  you have said that the the the next big thing in enterprise IT really doesn't exist you're telling us now your philosophy is somewhat non contrarian most VCS like you said are out chasing a trend they're trying to focus on momentum so so talk about that a little bit if there is no next big thing in IT well how do you decide what to invest in you said you have these market maps talk a little bit about that philosophy so I I think what I really said is that there's no way we know what the next big thing is as a matter of fact if I could articulate what the next big thing is i'll tell you it is not the next big thing as i said earlier in a presentation the day before we met Fred ludie if you had asked me that question I would not have told you IT Service Management is the next big thing it took Fred to come in and explain to us why that was going to be a market opportunity and we jumped on it so if we make ten investments four or five fits some kind of market map it's an extension of the world we know mobile is going to penetrate I can tell you the real exciting investments are the ones where no one's paying attention and someone like Fred lady can see the future so there is no so yes there's going to be next big thing is going to be wearable computing is going to be Google glass who the heck knows but there's going to be a founder an entrepreneur that's going to explain to us here's an application for google so you haven't thought of that's going to make it very clear why we want to chase that and not just wearing a pair of glasses marc andreessen was on CNBC yesterday talking about the perils of public companies and and and basically well it was somewhat self-serving I tended to agree with a lot of what are you saying i mean the barriers for a public company are now so high but now here you are with with service now what's that experience been like taking the company public i guess if you're always beating on the upside that helps but you know there's eventually going to be some bumps in the road so what's your you know opinion on the whole public market you know so what's your stance on that well the position i have is that it's better to stay private because that you can do a lot more so there's only two or three reasons to go public one is a branding event your competitors will say oh it's a small private company they're running out of cash and so on sensing your financials are not public some customers may tend to believe it second is to finance a company although one thing I'd argue is that if you've got a great investment with lots of money whether your private or public and third is to provide some liquidity for employees unfortunately the liquidity for them is not something that happens overnight you know one day you go public the next day is not the david you sell all your shares and so it really comes down to a branding event and our position is keep companies private until they get very strong practice for a year or so done to what it's like to be public have your financial house in order then go public and always start with an o first and move the way towards a yes because the IPO is simply a day in the life of the company as you're trying to build a great business it's not the other way where you go public let's all go public for the heck of it so start with an old justified chuoi yes your life was change and you better have control over your forecast your financial systems and so on prior to being published yeah so service now obviously New York Stock Exchange selling to the global 2000 the biggest companies that had to help from a branding standpoint it helped a lot because old the fight in the business or in the market that was spread by our competitors we're not financially viable well I think the whole world sees that we are way more than financially viable all that junk that a local salesman is going to say against another local salesman in the heat of sale situations is completely out of the market because now what you're dealing was with facts and we knew that our fax way better than our competitors facts well there's so many insularity benefits to it wasn't the motivation for going public but you've you know prior to going public cash flow was king and you had to you know invoice a certain way and now you've got you know hundreds of millions of dollars in the balance sheet and and so you're able to it gives you greater financial flexibility as well yeah we have cash flows as a private company and you know and as a public company it's not that if you have a lot of cash that you can spend it for the heck of it you have to justify model why doing so is the the right thing cash cash is always available if you have a terrific company there's people that are willing to throw cash in bucketfuls of you so it's not cash um we talked it was interesting to hear Frank today talking about Facebook he was my second topic just definitely the first major IPO and technology right after Facebook he called it the face plant IPO tongue-in-cheek but then of course you had work day as well and you guys seem to be more work day like you know kind of similar transformation even though you're going to IT is that a fair comparison yes I I think it's a fair comparison is that it's too fabulous SAS companies you know about six months ago if I act if I'd ask someone what's the grade the second greatest company in the SAS marketplace nobody could name it Salesforce nobody new number two now people know its sales force its work day and it's service now it's a fair comparison I think that both companies have a very long term market opportunities and I think both companies have standalone possibility have the possibilities of being large and standalone companies for many years to come so Sequoia obviously great firm you know one of the leading venture capital firms in the in the west coast in the win the world what's that what sets Sequoia apart we've been in business for 40 years and we've been on top of our game for 40 years or on top of the business I hate calling it a game we tend to hot sports analogies here that's okay no there's dangerous with sports analogies because the moment I mentioned team and a sports team there's only room for five people and a basketball team was starts and that's the koya if you've got ten people were skillful we have room for all 10 of them so I'm always a bit leery of the sports analogy but but it's the culture it the culture of people that came from humble beginnings who have a deep-rooted need to win we have good business instincts who are willing to learn and we're willing to be business partners and that's a key set of words business partners to founders to help them build a great business over the very long term you've spent some time in business development and sales over the years how has sales or has sales changed over that time frame some things have some things haven't I remember 15 years ago 20 years ago wait you could not get to what we call the SMB the small businesses because the cost of sales was too expensive now due to telesales and the internet that you can get there but there are some things that have not changed if you've got a sales force you they should be very well paid they should not have a high base they should be able to make a ton of money sales leadership you come from a former salesperson so some things have change and some things are deeply rooted in the DNA of a salesperson and may never change I took the only we're out of time but I want one last question is we're observers of service now outside observers what should we be watching for what are the things that you would ask us to pay attention to what watch how deeply ingrained throughout the many departments of a company the ServiceNow software becomes not just for IT Service Management but for a variety of applications written by employees of that company for the benefit of that company all right Chuck thank you very much really exciting to have you on the cube great job congratulations let you said you're not done yet so good luck when you're your future journey is really a thank-you a measure thank you thank you very much all righty buddy I'll be right there we will be back with our next guest this is service nows knowledge conference i'm dave vellante with Jeff Rick this is the cube we'll be right back after this short break