>> Narrator: "theCUBE's" live coverage is made possible by funding from Dell Technologies. Creating technologies that drive human progress. (intro music) >> Good afternoon, everyone. Welcome back to "theCUBE's" day three coverage of MWC23. Lisa Martin here in Spain, Barcelona, Spain with Dave Nicholson. We're going to have a really interesting conversation next. We're going to really dig into MWC, it's history, where it's going, some of the controversy here. Please welcome our guests. We have Jim Harris, International Best Selling Author of "Blindsided." And Carolina Milanese is here, President and Principle Analyst of creative strategies. Welcome to "theCUBE" guys. Thank you. >> Thanks. So great to be here. >> So this is day three. 80,000 people or so. You guys have a a lot of history up at this event. Caroline, I want to start with you. Talk a little bit about that. This obviously the biggest one in, in quite a few years. People are ready to be back, but there's been some, a lot of news here, but some controversy going on. Give us the history, and your perspective on some of the news that's coming out from this week's event. >> It feels like a very different show. I don't know if I would say growing up show, because we are still talking about networks and mobility, but there's so much more now around what the networks actually empower, versus the network themselves. And a little bit of maybe that's where some of the controversy is coming from, carriers still trying to find their identity, right, of, of what their role is in all there is to do with a connected world. I go back a long way. I go back to when Mobile World Congress was called, was actually called GSM, and it was in Khan. So, you know, we went from France to Spain. But just looking at the last full Mobile World Congress here in Barcelona, in pre-pandemic to now, very different show. We went from a show that was very much focused on mobility and smartphones, to a show that was all about cars. You know, we had cars everywhere, 'cause we were talking about smart cities and connected cars, to now a show this year that is very much focused on B2B. And so a lot of companies that are here to either work with the carriers, or also talk about sustainability for instance, or enable what is the next future evolution of computing with XR and VR. >> So Jim, talk to us a little bit about your background. You, I was doing a little sleuthing on you. You're really focusing on disruptive innovation. We talk about disruption a lot in different industries. We're seeing a lot of disruption in telco. We're seeing a lot of frenemies going on. Give us your thoughts about what you're seeing at this year's event. >> Well, there's some really exciting things. I listened to the keynote from Orange's CEO, and she was complaining that 55% of the traffic on her network is from five companies. And then the CEO of Deutsche Telecom got up, and he was complaining that 60% of the traffic on his network is from six entities. So do you think they coordinated pre, pre-show? But really what they're saying is, these OTT, you know, Netflix and YouTube, they should be paying us for access. Now, this is killer funny. The front page today of the show, "Daily," the CO-CEO of Netflix says, "Hey, we make less profit than the telcos, "so you should be paying us, "not the other way around." You know, we spend half of the money we make just on developing content. So, this is really interesting. The orange CEO said, "We're not challenging net neutrality. "We don't want more taxes." But boom. So this is disruptive. Huge pressure. 67% of all mobile traffic is video, right? So it's a big hog bandwidth wise. So how are they going to do this? Now, I look at it, and the business model for the, the telcos, is really selling sim cards and smartphones. But for every dollar of revenue there, there's five plus dollars in apps, and consulting and everything else. So really, but look at how they're structured. They can't, you know, take somebody who talks to the public and sells sim cards, and turn 'em in, turn 'em in to an app developer. So how are they going to square this circle? So I see some, they're being disrupted because they're sticking to what they've historically done. >> But it's interesting because at the end of the day, the conversation that we are having right now is the conversation that we had 10 years ago, where carriers don't want to just be a dumb pipe, right? And that's what they are now returning to. They tried to be media as well, but that didn't work out for most carriers, right? It is a little bit better in the US. We've seen, you know, some success there. But, but here has been more difficult. And I think that's the, the concern, that even for the next, you know, evolution, that's the, their role. >> So how do they, how do they balance this dumb pipe idea, with the fact that if you make the toll high enough, being a dumb pipe is actually a pretty good job. You know, sit back, collect check, go to the beach, right? So where, where, where, where does this end up? >> Well, I think what's going to happen is, if you see five to 15 X the revenue on top of a pipe, you know, the hyperscalers are going to start going after the business. The consulting companies like PWC, McKinsey, the app developers, they're... So how do you engage those communities as a telco to get more revenue? I think this is a question that they really need to look at. But we tend to stick within our existing business model. I'll just give you one stat that blows me away. Uber is worth more than every taxi cab company in North America added together. And so the taxi industry owns billions in assets in cars and limousines. Uber doesn't own a single vehicle. So having a widely distributed app, is a huge multiplier on valuation. And I look to a company like Safari in Kenya, which developed M-Pesa, which Pesa means mo, it's mobile money in Swahili. And 25% of the country's GDP is facilitated by M-Pesa. And that's not even on smartphones. They're feature phones, Nokia phones. I call them dumb phones, but Nokia would call them "feature phones." >> Yeah. >> So think about that. Like 25, now transactions are very small, and the cut is tiny. But when you're facilitating 25% of a country's GDP, >> Yeah. >> Tiny, over billions of transactions is huge. But that's not the way telcos have historically thought or worked. And so M-Pesa and Safari shows the way forward. What do you think on that? >> I, I think that the experience, and what they can layer on top from a services perspective, especially in the private sector, is also important. I don't, I never believe that a carrier, given how they operate, is the best media company in the world, right? It is a very different world. But I do think that there's opportunity, first of all, to, to actually tell their story in a different way. If you're thinking about everything that a network actually empowers, there's a, there's a lot there. There's a lot that is good for us as, as society. There's a lot that is good for business. What can they do to start talking about differently about their services, and then layer on top of what they offer? A better way to actually bring together private and public network. It's not all about cellular, wifi and cellular coming together. We're talking a lot about satellite here as well. So, there's definitely more there about quality of service. Is, is there though, almost a biological inevitability that prevents companies from being able to navigate that divide? >> Hmm. >> Look at, look at when, when, when we went from high definition 720P, very exciting, 1080P, 4K. Everybody ran out and got a 4K TV. Well where was the, where was the best 4K content coming from? It wasn't, it wasn't the networks, it wasn't your cable operator, it was YouTube. It was YouTube. If you had suggested that 10 years before, that that would happen, people would think that you were crazy. Is it possible for folks who are now leading their companies, getting up on stage, and daring to say, "This content's coming over, "and I want to charge you more "for using my pipes." It's like, "Really? Is that your vision? "That's the vision that you want to share with us here?" I hear the sound of dead people walking- (laughing) when I hear comments like that. And so, you know, my students at Wharton in the CTO program, who are constantly looking at this concept of disruption, would hear that and go, "Ooh, gee, did the board hear what that person said?" I, you know, am I being too critical of people who could crush me like a bug? (laughing) >> I mean, it's better that they ask the people with money than not consumers to pay, right? 'Cause we've been through a phase where the carriers were actually asking for more money depending on critical things. Like for instance, if you're doing business email, then were going to charge you more than if you were a consumer. Or if you were watching video, they would charge you more for that. Then they understood that a consumer would walk away and go somewhere else. So they stopped doing that. But to your point, I think, and, and very much to what you focus from a disruption perspective, look at what Chat GTP and what Microsoft has been doing. Not much talk about this here at the show, which is interesting, but the idea that now as a consumer, I can ask new Bing to get me the 10 best restaurants in Barcelona, and I no longer go to Yelp, or all the other businesses where I was going to before, to get their recommendation, what happens to them? You're, you're moving away, and you're taking eyeballs away from those websites. And, and I think that, that you know, your point is exactly right. That it's, it's about how, from a revenue perspective, you are spending a lot of money to facilitate somebody else, and what's in it for you? >> Yeah. And to be clear, consumers pay for everything. >> Always. Always. (laughs) >> Taxpayers and consumers always pay for everything. So there is no, "Well, we're going to make them pay, so you don't have to pay." >> And if you are not paying, you are the product. Exactly. >> Yes. (laughing) >> Carolina, talk a little bit about what you're seeing at the event from some of the infrastructure players, the hyperscalers, obviously a lot of enterprise focus here at this event. What are some of the things that you're seeing? Are you impressed with, with their focus in telco, their focus to partner, build an ecosystem? What are you seeing? >> I'm seeing also talk about sustainability, and enabling telco to be more sustainable. You know, there, there's a couple of things that are a little bit different from the US where I live, which is that telcos in Europe, have put money into sustainability through bonds. And so they use the money that they then get from the bonds that they create, to, to supply or to fuel their innovation in sustainability. And so there's a dollar amount on sustainability. There's also an opportunity obviously from a growth perspective. And there's a risk mitigation, right? Especially in Europe, more and more you're going to be evaluated based on how sustainable you are. So there are a lot of companies here, if you're thinking about the Ciscos of the world. Dell, IBM all talking about sustainability and how to help carriers measure, and then obviously be more sustainable with their consumption and, and power. >> Going to be interesting to see where that goes over the years, as we talk to, every company we talk to at whatever show, has an ESG sustainability initiative, and only, well, many of them only want to work with other companies who have the same types of initiative. So a lot of, great that there's focus on sustainability, but hopefully we'll see more action down the road. Wanted to ask you about your book, "Blind," the name is interesting, "Blindsided." >> Well, I just want to tag on to this. >> Sure. >> One of the most exciting things for me is fast charging technology. And Shalmie, cell phone, or a smartphone maker from China, just announced yesterday, a smartphone that charges from 0 to 100% in five minutes. Now this is using GAN FEST technology. And the leader in the market is a company called Navitas. And this has profound implications. You know, it starts with the smartphone, right? But then it moves to the laptops. And then it'll move to EV's. So, as we electrify the $10 trillion a year transportation industry, there's a huge opportunity. People want charging faster. There's also a sustainability story that, to Carolina's point, that it uses less electricity. So, if we electrify the grid in order to support transportation, like the Tesla Semi's coming out, there are huge demands over a period. We need energy efficiency technologies, like this GAN FEST technology. So to me, this is humongous. And it, we only see it here in the show, in Shalmie, saying, "Five minutes." And everybody, the consumers go, "Oh, that's cool." But let's look at the bigger story, which is electrifying transportation globally. And this is going to be big. >> Yeah. And, and to, and to double click on that a little bit, to be clear, when we talk about fast charging today, typically it's taking the battery from a, not a zero state of charge, but a relatively low state of charge to 80%. >> Yep. >> Then it tapers off dramatically. And that translates into less range in an EV, less usable time on any other device, and there's that whole linkage between the power in, and the battery's ability to be charged, and how much is usable. And from a sustainability perspective, we are going to have an avalanche of batteries going into secondary use cases over time. >> They don't get tossed into landfills contrary to what people might think. >> Yep. >> In fact, they are used in a variety of ways after their primary lifespan. But that, that is, that in and of itself is a revolutionary thing. I'm interested in each of your thoughts on the China factor. Glaringly absent here, from my perspective, as sort of an Apple fanboy, where are they? Why aren't they talking about their... They must, they must feel like, "Well we just don't need to." >> We don't need to. We just don't need to. >> Absolutely. >> And then you walk around and you see these, these company names that are often anglicized, and you don't necessarily immediately associate them with China, but it's like, "Wait a minute, "that looks better than what I have, "and I'm not allowed to have access to that thing." What happens in the future there geopolitically? >> It's a pretty big question for- >> Its is. >> For a short little tech show. (Caroline laughs) But what happens as we move forward? When is the entire world going to be able to leverage in a secure way, some of the stuff that's coming out of, if they're not the largest economy in the world yet, they shortly will be. >> What's the story there? >> Well, it's interesting that you mentioned First Apple that has never had a presence at Mobile World Congress. And fun enough, I'm part of the GSMA judges for the GLOMO Awards, and last night I gave out Best Mobile Phone for last year, and it was to the iPhone4 Team Pro. and best disruptive technology, which was for the satellite function feature on, on the new iPhone. So, Apple might not be here, but they are. >> Okay. >> And, and so that's the first thing. And they are as far as being top of mind to every competitor in the smartphone market still. So a lot of the things that, even from a design perspective that you see on some of the Chinese brands, really remind you of, of Apple. What is interesting for me, is how there wouldn't be, with the exception of Samsung and Motorola, there's no one else here that is non-Chinese from a smartphone point of view. So that's in itself, is something that changed dramatically over the years, especially for somebody like me that still remember Nokia being the number one in the market. >> Huh. >> So. >> Guys, we could continue this conversation. We are unfortunately out of time. But thank you so much for joining Dave and me, talking about your perspectives on the event, the industry, the disruptive forces. It's going to be really interesting to see where it goes. 'Cause at the end of the day, it's the consumers that just want to make sure I can connect wherever I am 24 by seven, and it just needs to work. Thank you so much for your insights. >> Thank you. >> Lisa, it's been great. Dave, great. It's a pleasure. >> Our pleasure. For our guests, and for Dave Nicholson, I'm Lisa Martin. You're watching, "theCUBE," the leader in live and emerging tech coverage coming to you day three of our coverage of MWC 23. Stick around. Our next guest joins us momentarily. (outro music)

>>from around the globe. It's >>The Cube with digital coverage of IBM think 2021 brought to you by IBM Well hi everybody john Wallace here on the cube. Thanks for joining us here. As we continue our initiative of IBM think a chance to look at what IBM thinks in terms of infrastructure, we're talking to you about a hybrid cloud kind of the new trend. The thought that's going to the hybrid cloud, what's the future look like and help us cover that waterfront. A couple of experts from Deloitte Terry Cobb, the IBM Alliance lead at Deloitte Terry. Thank you for joining us. We look forward to this time together. >>Thank you so much for having me. You >>bet. And also introduced Dave Knight quickly, your colleague who is a senior solution architect and IBM Alliance cloud leader at Deloitte. Dave good to see you as well. Thanks for being with us. >>Thanks for having me. >>Alright, so maybe it's just for the two of you set the table for our viewers here in terms of your specific roles of delight. I talked about IBM and your connections there, but in terms of what you're doing there, how you work together and ultimately what kind of service you're trying to provide your clients terry? Why don't you jump on that first? >>Sure. So I've been with Deloitte for 16 years, I believe, maybe a little longer and focusing on the IBM like our strategic partnership. Um and so what that means is I work day in day out with our practitioners to identify and understand where our clients what are some of the critical business needs. And so I work with are leaders and and collaborate with IBM and we we look for ways to solve really unique critical business issues. Um and so part of my my background, so I've come from, you know, at my 30 year background and strategy management consulting. So it's really exciting. I get to use my uh consulting skills, my strategy skills to, you know, look at where we are in the market, what's what's happening in the market because that's a great example. There was a huge impact on how businesses, you know, work, how they work differently and how they handle their workforce. So it was a very interesting time. And and so bringing these two great firms together to solve some of these critical business issues. As for me, it's, you know, it's it's critical and it has a positive impact on, you know, for our clients. >>All right, dave from your side of the fence. >>Yeah. So um I sit in a similar place within the firm. I actually joined the last century. I've been with the firm for 21 years, so uh in a variety of roles, but all with with sort of a technical last solution architecture um, slant. Right, So, so just like Terry mentioned in the alliance function, we try to find opportunities to work together specifically between IBM and the Deloitte, you know, go to market services, uh my role as a solution architect and then as the cloud lead is to make sure that we've got the right mix of technology that we solve the client's problems uh efficiently and cost effectively. Uh and then, you know, sort of translate those, those business problems into technical solutions and then those technical solutions back into business solutions. So the business sees the value and its valuable not only for Deloitte from the services perspective, but also for IBM. >>He just almost just blew me away when you said you've been there since the last century. I haven't heard it quite put that way. And it's really that was really good, uh >>1999, to be fair, but still, it >>certainly implies a lot of experience. That's for sure. That's it. But that was really, that was a unique twist. So, kudos to you, let's talk about your client's first a little bit. So you talk about problems and we're talking about obviously technology and deployments and what capabilities are. So today, right. You've got on primary got off Premier, you've got private cloud, you've got public cloud, you've got edge technologies, you've got this really just this maelstrom basically of opportunity, but also confusion a little bit right? Um with different kinds of capabilities, different kinds of challenges. So Dave if you would, you know, let's look at it from the macro level then, in terms of how you start dissecting these kinds of decisions that the, the C T O. S and with your within your client list have to make and and how you help them chart their course in terms of determining priorities and what the right steps are for them to take. >>Okay. So I mean you sort of summarized my points actually quite nicely. We we help customers find their path, what's there, right approach to their digital transformation journey. Um We do have assets that help them, you know identify workloads where they might might run the best. Um We certainly have approaches and experience in the market having done this for for years. Uh you know it's the number one cloud professional services firm globally. We we we've garnered a lot of experience working with customers again helping among this journey. Um What we've learned is that one size does not fit all. Um Clearly cloud and more specifically public cloud is a game changer. It's here to stay, but it's not necessarily the right answer for every workload for every customer even. Um And so what we're starting to see is is a shift towards hybrid discussions and hybrid architecture discussions. Um and just as a quick, very simple example, um you wouldn't go purchase a mainframe to be a web server, right, That's that's significant overkill. And similarly, um the cloud is great for its, you know, capacity and and all the things that come with an economics, that sort of thing, but it's not necessarily the best platform for a credit card clearing house. Right. The transactional volume is simply too great. Right? So, um and that sort of very simplified example. Hybrid we think is the answer. And we're seeing lots of customers now that they've shifted a lot of their workloads to cloud that our cloud suitable. Um starting to ask us the more difficult questions, right, the core of my business, it's a high risk move. Can you help me sort this out? And in many cases the answer is don't move it, it's too extended at the edge. It's to augment it with cloud technologies such as AI and and enhance your service rather than replace it or move it to a different location. >>So you recently published a report that you did the mainframe market poll survey where you're looking at really, I guess migration plans or an appetite right to make these evolutions to, to to explore this hybrid cloud model that you've already detailed for us. Um, give me an idea if you would and our our viewers an idea a little bit about some of the key summaries of that in terms of what the appetite is for that, what the desires are, you know, are we ready to cut the court on the mainframe and let it go? Is there too much involved? We want to hang on. Um, you know, what's kind of, what's the mood out there right now? >>Yes, so we, we commissioned the double blind survey, we had a belief that we really wanted to explore it further, um, and that belief was, you know, a little tongue in cheek. The death of the mainframe is greatly over exaggerated. Um, and so again, this double blind survey, we commissioned it and, and we, we found a lot of interesting results. First and foremost, um, the mainframe for many customers is not going away. The vast majority of our survey respondents uh, indicated that was the case. Um, there was a couple of other interesting to, that's that, that we, we found in the results as well. Um uh, the first one is this isn't just a technology issue um It's a human capital um issue as well with the aging workforce. Um You know, mainframe not being quite as sexy in the age of java but coming back to IBM investments in the platform. Um And then another key point that we we found was security continues to be a key concern of business I. T. Uh and business, you know, owners. Um and that mainframe is seen as is the pillar of security sort of, they hold it up as sort of the example of security in the industry. Um Another interesting too that we found was that Um you know, one specific question asked about future growth plans and um over just under 60%. So over half answered three questions um that most people would think are at odds with each other and that is you know, are you expanding your mainframe? Over 60 said Yes. Um, are you advancing into cloud? Just under 60 said yes. And then there was a hybrid question which over half said they were going to look at hybrid. So that sort of marriage of mainframe and cloud in a hybrid way was an interesting thing that we weren't exactly expecting, but still quite interesting to explore. >>So >>when >>you hear this right about these, I mean not conflicting, but certainly, you know, interesting of uh survey findings, um, what do you make of that? What what are you, how are you reading those tea leaves a little bit about what people are saying about not ready to leave, but yet they're interested. And and so the concerns that they've brought up about security, about the asian workforce, I mean, you know, a lot of challenging uh, positions here, they have to be considered for your clients. >>You know, for me it was very interesting and and I believe, you know, one of the reasons we launched the survey was really to find out what is really going on with our clients because we're hearing a lot of, you know, there's a lot of news around clients migrating all their all their applications, >>I say all >>to the cloud and but yet we were spending a lot of time with clients that had mainframes and we were solving some of their mainframe issues and so we we were a little confused, so that was part of the impetus from really getting out and enjoying market sensing and figure out what our clients really doing. And we didn't target, you know, the mainframe, you know, clients, we targeted main from clients but we didn't target mainframe users. We were looking at really the business users of the mainframe and the executives that have mainframes. And so we were, it was surprising to to get the information back and hear how important the mainframe, so us. Uh and and then when you start digging a bit deeper into, you know, what does cloud really mean? Your hybrid cloud comes to the surface and then you have people that have different meanings of hybrid cloud. So, really understanding what is hybrid cloud really mean and what does it mean for your business? And that's what we're solving today. It's like how do we how do we go to market around hybrid cloud and what benefits does it have work for our clients? >>Yeah, so, Dave yeah, to touch up on that, to follow up, I mean, so, how are you a Deloitte then taking these results and and kind of ingesting them and distilling them and deciding. All right, this is how we're going to define hybrid cloud perhaps. I mean, I don't know if that if that's a bold assumption, but I think you're probably trying to draw some parameters around it, Right? This is how our clients see it. So this is how we're gonna talk about it and then this is how we're going to take them on that journey. How instructive was this survey for that and actually what are you doing with it in terms of shaping your practice? >>Yeah, so it's a great question and it is driving um you know, not the survey by itself, but a lot of the market trends and including the surveys is driving um some reevaluation and refocusing quite frankly on on hybrid cloud um as an offering within the firm. Right? We we define hybrid cloud generally is, you know, seamless integration of data and applications across on and off premise. And with with the wave of five G that's coming at us, increasingly we're looking at architecture is that include edge uh into that that hybrid definition? Um you know, I've said this to a lot of folks uh for me, mainframe was the original cloud. So it's only natural that it should be part of solutions now. And what I mean by that is when it was released it was virtualized, it was virtually unlimited. Somebody else managed it for you. You you you you only paid for what you use. Those are all characteristics of the cloud as we know it today, but those were implemented in the 70s, the mainframe um and so, capturing those characteristics and newer technologies and then integrating those into architectures. I think it's going to be sort of the next wave of what we see in the industry and, and Deloitte is certainly positioning to help our customers on that journey. And >>before we sign off, I do want to touch on security issue again because you did bring it up a little bit earlier, but let's just talk about it holistically here, depending upon where you are, doesn't matter right edge on off private public. I mean security's gonna be first and foremost. And so what are you suggesting or what are you saying to your clients? You know, terry and dave on this. In terms of their security concerns, the awareness they have to have in that and the allocation of resources to make sure that, you know, whatever solutions they deploy, their their credible, they have integrity and and they're sustainable. So let's hit on security before we head out terry. If you don't mind jumping >>first, I'd like to address security. But even stepping back a little bit. So as clients for looking at moving applications to the cloud for hybrid cloud, it's really about, you know, making sure you have a strategy unless you address some of the underlying data infrastructure, you're gonna end up with you disparate data everywhere and you're not going to be able to, you're gonna have data silo issues, you're gonna have security issues. You also have complex architectural issues. So, you know, some of the work that we're doing with IBM and internally with our firm is trying to help clients understand like you take a step back and really evaluate their business requirements and making sure that they and your dave can you found on this. But it's really making sure they have the right strategy in place to address, you know, their data, where the data sets, how to innovate some of these applications and of course security, security is a huge concern. We see that from all of our clients and needs to be on prem and secure. Mhm. >>Just a final word. >>Yeah. Thanks. Just to add on to that. Right. So security is absolutely critical. As terry mentioned. Having a strategy is absolutely critical and having security be integral to that strategy is equally critical. Um As you said, it's everywhere, cloud on prem on the edge. I would even go so far as to say, you know, in your personal life and your professional life, it should be as pervasive as we like to think it is. I think the reality is that maybe isn't but that's part of the job of architects like me, is to make sure that it gets built in at its core. It's not an afterthought, it's integral. I've got some fantastic technologies around that, specifically in the Z space. Um you don't wanna get too too wonky here, but you know, Phipps 1 40 dash to level four encryption, which is unique in the market. Um, you know, data privacy, passports, pervasive encryption, all these things. Um, interestingly enough live in the mainframe but extended ideas cloud and um from my perspective, I think it's one of the unique uh, connections intersections where mainframe could actually help drive the growth of cloud um, in that hybrid model and even getting into future looking things like home, um, or fixed encryption, there's a raft of technologies coming out of IBM um, that help us ensure we have, you know, secure transactions, secure hybrid architectures as you put our security everywhere. >>Well, you can get a little wonky. That's okay. David terry, thank you for the time today. We certainly appreciate it. And thanks for shining light on your work at Deloitte and of course, that partnership you have. It's working so well with IBM. Thank you both. >>Thanks for having us. >>All right. We've been talking about hybrid cloud, the future of a hybrid cloud and the mainframe and it ain't dead yet. All right. John Wallace. Thanks for joining us here on the cube.

(screen switch sound) >> Hey, welcome back everybody. Jeff Frick here with theCUBE. We're at the place that you should be. Where is that you say? Linked-In's new downtown San Francisco's headquarters at Data Privacy Day 2018. It's a small, but growing event. Talking, really a lot about privacy. You know we talk a lot about security all the time. But privacy is this kind of other piece of security and ironically it's often security that's used as a tool to kind of knock privacy down. So it's an interesting relationship. We're really excited to be joined by our first guest Michelle Dennedy. We had her on last year, terrific conversation. She's the Chief Privacy Officer at Cisco and a keynote speaker here. Michelle, great to see you again. >> Great to see you and happy privacy day. >> Thank you, thank you. So it's been a year, what has kind of changed on the landscape from a year ago? >> Well, we have this little thing called GDPR. >> Jeff: That's right. >> You know, it's this little old thing the General Data Protection Regulation. It's been, it was enacted almost two years ago. It will be enforced May 25, 2018. So everyone's getting ready. It's not Y2K, it's the beginning of a whole new era in data. >> But the potential penalties, direct penalties. Y2K had a lot of indirect penalties if the computers went down that night. But this has significant potential financial penalties that are spelled out very clearly. Multiples of revenue. >> Absolutely >> So what are people doing? How are they getting ready? Obviously, the Y2k, great example. It was a scramble. No one really knew what was going to happen. So what are people doing to get ready for this? >> Yeah, I think its, I like the analogy it ends because January one, after 2000, we figured it out, right? Or it didn't happen because of our prep work. In this case, we have had 20 years of lead time. 1995, 1998, we had major pieces of legislation saying know thy data, know where it's going, value it and secure it, and make sure your users know where and what it is. We didn't do a whole lot about it. There are niche market people, like myself, who said "Oh my gosh, this is really important." but now the rest of the world has to wake up and pay attention because four percent of global turnover is not chump change in a multi-billion dollar business and in a small business it could be the only available revenue stream that you wanted to spend innovating-- >> Right, right >> rather than recovering. >> But the difficulty again, as we've talked about before is not as much the companies. I mean obviously the companies have a fiduciary responsibility. But the people-- >> Yes. >> On the end of the data, will hit the ULA as we talked about before without thinking about it. They're walking around sharing all this information. They're logging in to public WiFi's and we actually even just got a note at theCube the other day asking us what our impact, are we getting personal information when we're filming stuff that's going out live over the internet. So I think this is a kind of weird implication. >> I wish I could like feel sad for that but there's a part of my privacy soul that's like, "Yes! People should be asking. "What are you doing with my image after this? "How will you repurpose this video? "Who are my users looking at it?" I actually, I think it's difficult at first to get started. But once you know how to do it, it's like being a nutritionist and a chef all in one. Think about the days before nutrition labels for food. When it was first required, and very high penalties of the same quanta of the GDPR and some of these other Asiatic countries are the same, people simply didn't know what they were eating. >> Right. >> People couldn't take care of their health and look for gluten free, or vitamin E, or vitamin A, or omega whatever. Now, it's a differentiator. Now to get there, people had to test food. They had to understand sources. They had to look at organics and pesticides and say, "This is something that the populace wants." And look at the innovation and even something as basic and integral to your humanity as food now we're looking at what is the story that we're sharing with one another and can we put the same effort in to get the same benefits out. Putting together a nutrition label for your data, understanding the mechanisms, understanding the life cycle flow. It's everything and is it a pain in the tuckus some times? You betcha. Why do it? A: You're going to get punished if you don't. But more importantly, B: It's the gateway to innovation. >> Right. It's just funny. We talked to a gal in a security show and she's got 100% hit rate. She did this at Black Hat, social engineering access to anything. Basically by calling, being a sweetheart, asking the right questions and getting access to people's-- >> Exactly. >> So where does that fit in terms of the company responsibility, when they are putting everything, as much as they can in their place. Here like at AWS too you'll hear, "Somebody has a security breach at AWS." Well it wasn't the security of the AWS system, it was somebody didn't hit a toggle switch in the right position. >> That's right. >> So it's pretty complex versus if you're a food manufacturer, hopefully you have pretty good controls as to what you put in the food and then you can come back and define. So it's a really complicated problem when it's the users who you're tryna protect that are often the people that are causing the most problems. >> Absolutely. And every analogy has its failures right? >> Right, right. >> We'll stick with food for a while. >> Oh no I like the food one. >> Alright it's something you can understand. >> Y2K is kind of old, right. >> Yeah, yeah. But think about like, have we made, I was going to use a brand name, a spray on cheese chip, have we made that illegal? That stuff is terrible for your body. We have an obesity crisis here in North America certainly, and other parts of the world, and yet we let people choose what they're putting into their bodies. At the same time we're educating consumers about what the new food chart should look like, we're listening to maybe sugar isn't as good as we thought it was, maybe fat isn't as bad. So giving people some modicum of control doesn't mean that people are always going to make the right choices but at least we give them a running chance by being able to test and separate and be accountable for at least what we put into the ingredients. >> Right, right, okay so what are some of the things you're working on at Cisco? I think you said before we go on the air you have a new report published, study, what's going on? I do, I'm ashamed Jeff to be so excited about data but, I'm excited about data. (laughter) >> Everybody's excited about data. >> Are they? >> Absolutely. >> Alright let's geek out for a moment. >> So what did you find out? >> So we actually did the first metrics reporting correlating data privacy maturity models and asking customers, 3,000 customers plus in 20 different countries from companies of all sizes S and B's to very large corps, are you experiencing a slow down based on the fears of privacy and security problems? We found that 68 percent of these questions said yes indeed we are, and we asked them what is the average timing of slowing down closing business based on these fears. We found a big spread from over 16 and a half weeks all the way down to two weeks. We said that's interesting. We asked that same set of customers, where would you put yourself on a zero to five ad hoc to optimized privacy maturity model. What we found was if you were even middle of the road a three or a four, to having some awareness, having some basic tools, you can lower your risk of loss, by up to 70 percent. I'm making it sound like it's causation, it's just a correlation but it was such a strong one that when we ran the data last year I didn't run the report, because we weren't sure enough. So we ran it again and got the same quantum with a larger sample size. So now I feel pretty confident that the self reporting of data maturity is related to closing business more efficiently and faster on the up side and limiting your losses on the down side. >> Right, so where are the holes? What's the easiest way to get from a zero or one to a three or a four, I don't even want to say three or four, two or three in terms of behaviors, actions, things that people do? >> So you're scratching on my geeky legal underbelly here. (laughter) I'm going to say it depends Jeff. >> Of course of course. >> Couching this and I'm not your lawyer. >> No forward licking statements. >> No forward licking statement. Well, for a reason what the heck. We're looking forward not back. It really does depend on your organization. So, Cisco, my company we are known for engineering. In fact on the down side of our brand, we're known for having trouble letting go until everything is perfect. So, sometimes it's slower than you want cause we want to be so perfect. In that culture my coming into the engineering with their bonafides and their pride in their brand, that's where I start to attack with privacy engineering education, and looking at specs and requirements for the products and services. So hitting my company where it lives in engineering was a great place to start to build in maturity. In a company like a large telco or healthcare or highly regulated industry, come from the legal aspect. Start with compliance if that's what is effective for your organization. >> Right, right. >> So look at where you are in your organization and then hit it there first, and then you can fill up, document those policies, make sure training is fun. Don't be afraid to embarrass yourself. It's kind of my mantra these days. Be a storyteller, make it personal to your employees and your customers, and actually care. >> Right, hopefully, hopefully. >> It's a weird thing to say right, you actually should give a beep >> Have a relationship with people. When you look at how companies moved that curve from last year to this year was it a significant movement? Was it more than you thought less than you thought? Is it appropriate for what's coming up? >> We haven't tracked individual companies time after time cause it's double blind study. So it's survey data. The survey numbers are statistically relevant. That when you have a greater level of less ad hoc and more routinized systems, more privacy policies that are stated and transparent, more tools and technologies that are implemented, measured, tested, and more board level engagement you start to see that even if you have a cyber risk the chances that it's over 500 thousand per event goes down precipitously. If you are at that kind of mid range level of maturity you can take off 70 percent of the lag time and go from about four months of closing a deal that has privacy and security implications to somewhere around two to three weeks. That's a lot of time. Time in business is everything. We run by the quarter. >> Yeah well if you don't sell it today, you never get today back. You might sell it tomorrow, but you never get today back. Alright so we just flipped the calendar. I can't believe it's 2018. That's a whole different conversation. (laughter) What are your priorities for 2018 as you look forward? >> Oh my gosh. I am hungry for privacy engineering to become a non niche topic. We're going out to universities. We're going out to high schools. We're doing innovation challenges within Cisco to make innovating around data a competitive advantage for everyone, and come up with a common language. So that if you're a user interface guy you're thinking about data control and the stories that you're telling about what the real value is behind your thing. If you are a compliance guy or girl, how do I efficiently measure? How do I come back again in three months without having compliance fatigue, because after the first couple days of enforcement of GDPR and some of these other laws come into force it's really easy to say whew, it didn't hit me. I've got no problem now. >> Right. >> That is not the attitude I want people to take. I want them to take real ownership over this information. >> It's very ana logist to what's happening in security. >> Very much so. >> Just baking it in all the way. It's not a walled garden. You can't defend the perimeter anymore, but it's got to be baked into everything. >> It's no mistake that it's like the security world. They're about 25 years ahead of us in data privacy and protection. My boss is our chief trust officer who formally was our CISO I am absolutely free riding on all the progresses the security people have made. We're just really complimenting each others skills, and getting out into other parts of the business in addition to the technical part of the business. >> Exciting times. >> Yeah, it's going to be fun. >> Well great to catch up and >> Yeah you too. >> We'll let you go. Unfortunately we're out of time. We'll see you in 2019. >> Data Privacy Day. >> Data Privacy Day. She's Michelle Dennedy, I'm Jeff Frank. You're watching theCUBE. Thanks for tuning in from Data Privacy Day 2018. (music)

>> Announcer: Live from Las Vegas, it's theCUBE. Covering AWS re:Invent 2017. Presented by AWS, Intel and our ecosystem of partners. >> Hey, welcome back everyone. We're live here in Las Vegas. It's theCUBE's exclusive coverage of AWS. Amazon Web Services re:Invent 2017. Amazon web Services annual conference, 45,000 people here. Five years in a row for theCUBE, and we're going to be continuing to cover years and decades after, it's on a tear. I'm John Furrier, my co-host Stu Miniman. Exciting science, one of the biggest themes here is AI, IoT, data, Deep Learning, DeepLens, all the stuff that's been really trending has been really popular at the show. And the person behind that Amazon is Swami. He's the Vice President of Machine Learning at AWS, among other things, Deep Learning and data. Welcome to theCUBE. >> Stu: Good to see you. >> Excited to be here. >> Thanks for coming on. You're the star of the show. Your team put out some great announcements, congratulations. We're seeing new obstruction layers of complexity going away. You guys have made it easy to do voice, Machine Learning, all those great stuff. >> Swami: Yeah. >> What are you most excited about, so many good things? Can you pick a child? I don't want to pick my favorite child among all my children. Our goal is to actually put Machine Learning capabilities in the hands of all developers and data scientists. That's why, I mean, we want to actually provide different kinds of capabilities right from like machine developers who want to build their own Machine Learning models. That's where SageMakers and n21 platform that lets people build, train and deploy these models in a one-click fashion. It supports all popular Deep Learning frameworks. It can be TensorFlow, MXNet or PyCharm. We also not only help train but automatically tune where we use Machine Learning for Machine Learning to build these things. It's very powerful. The other thing we're excited about is the API services that you talked about, the new obstruction layer where app developers who do not want to know anything about Machine Learning but they want to transcribe their audio to convert from speech to text, or translate it or understand the text, or analyze videos. The other thing coming from academia where I'm excited about is I want to teach developers and students Machine Learning in a fun fashion, where they should be excited about Machine Learning. It's such a transformative capability. That's why actually we built a device meant for Machine Learning in a hands-on fashion that's called DeepLens. We have developers right on re:Invent where from the time they take to un-box to actually build a computer with an application to build Hotdog or Not Hotdog, they can do it in less than 10 minutes. It's an amazing time to be a developer. >> John: Yeah. >> Stu: Oh my God, Swami. I've had so many friends that have sat through that session. First of all, the people that sit through it they get like a kit. >> Swami: That's awesome. >> Stu: They're super excited. Last year it was the Ecodot and everybody with new skills. This year, DeepLens definitely seems to be the one that all the geeks are playing with, really programing stuff. There's a bunch of other things here, but definitely some huge buzz and excitement. >> That's awesome, glad to hear. >> Talk about the culture at Amazon. Because I know in covering you guys for so many years and now being intimate with a lot of the developers in your teams. You guys just don't launch products, you actually listen to customers. You brought up Machine Learning for developers. What specifically jumped out at you from talking to customers around making it easier? It was too hard, was it, or it was confined to hardcore math driven data scientists? Was it just the thirst and desire for Machine Learning? Or you're just doing this for side benefits, it's like a philanthropy project? >> No, in Amazon we don't build technology because it's cool. We build technology because that's what our customers want. Like 90 to 95% of our roadmap is influenced by listening to customers. The other 5 to 10% is us reading between the lines. One of the things I actually ... When I started playing with Machine Learning, having built a bunch of database storage and analytics products. When I started getting into Deep Learning and various things I realized there's a transformative capability of these technologies. It was too hard for developers to use it on a day to day fashion, because these models are too hard to build and train. Our data now, the right level of obstruction. That's why we actually think of it as in a multi-layered strategy where we cater to export practitioners and data scientists. For them we have SageMaker. Then for app developers who do not want to know anything about Machine Learning they say, "I'll give you an audio file, transcribe it for me," or "I'll give you text, get me insights or translate it." For them we actually we actually provide simple to use API services, so that they can actually get going without having to know anything about what is TensorFlow or PyCharm. >> TensorFlow got a lot of attention, because that really engaged the developer community in the current Machine Learning, because we're like, "Oh wow, this is cool." >> Swami: Yeah. >> Then it got, I won't say hard to use, but it was high end. Are you guys responding to TensorFlow in particular or you're responding to other forces? What was the driver? >> In amazon we have been using Machine Learning for like 20 years. Since the year of like 1995 we have been leveraging Machine Learning for recommendation engine, fulfillment center where we use robots to pick packages and then Elixir of course and Amazon Go. One of the things we actually hear is while frameworks like TensorFlow or PyCharm, MXNet or PyCharm is cool. It is just too hard for developers to make use of it. We actually don't mind, our users use Cafe or TensorFlow. We want the, to be successful where they take from idea to product shell. And when we talk to developers, this process took anywhere from 6 to 18 months and it should not be this hard. We wanted to do what AWS did to IT industry for compute storage and databases. We want to do the same for Machine Learning by making it really easy to get started and consumer does in utility. That was our intel. >> Swami, I wonder if you can tell us. We've been talking for years about the flywheel of customers for Amazon. What are the economies of scale that you get for the data that you have there. I think of all the training of all the Machine Learning, the developers. How can you leverage the economies of scale that Amazon has in all those kind of environments? >> When you look at Machine Learning, Machine Learning tends to be mostly the icing on the cake. Even when we talk to the expert professors who are the top 10 scientists in the world, the data that goes into the Machine Learning is going to be the determining factor for how good it is in terms of how well you train it and so forth. This is where data scientists keep saying the breath of storage and database and analytics offerings that exist really matter for them to build highly accurate models. When you talk about not just the data, but actually the underlying database technology and storage technology really is important. S3 is the world's most powerful data leg that exists that is highly secure, reliable, scalable and cost effective. We really wanted to make sure customers like Glacier Cloud who store high resolution satellite imagery on S3 and glacier. We wanted them to leverage ML capabilities in a really easy one-click fashion. That's important. >> I got to ask you about the roadmap, because you say customers are having input on that. I would agree with you that that would be true, because you guys have a track record there. But I got to put the dots that I'm connecting in my mind right now forward by saying, you guys ... And telegraphing here certainly heard well, Furner say it and Andy, data is key and opening up that data and we're seeing New Relic here, Sumo Logic. They're sharing anonymous data from usage, workloads really instructive. Data is instructive for the marketplace, but you got to feed the models on the data. The question for you is you guys get so much data. It's really a systems management dream it's an application performance dream. You got more use case data. Are you going to open that up and what's the vision behind it? Because it seems like you could offer more and more services. >> Actually we already have. If you look at x-rays and service that we launched last year. That is one of the coolest capabilities, even I am a developer during the weekends when I cool out. Being able to dive into specific capabilities so one of the performance insights where is the borderline. It's so important that actually we are able to do things like x-raying into an application. We are just getting started. The Cloud transformed how we are building applications. Now with Machine Learning, what is going to happen is we can even do various things like ... Which is going to be the borderline on what kind of datasets. It's just going to be such an amazing time. >> You can literally reimagine applications that are once dominant with all the data you have, if you opened it up and then let me bring my data in. Then that will open up a bigger aperture of data. Wouldn't that make the Machine Learning and then AI more effective? >> Actually, you already can do similar things with Lex. Lex, think of it as it's an automatic speech recognition natural language understanding where we are pre-trained on our data. But then to customize it for your own chat bots or voice applications, you can actually add your own intents and several things and we customize it underlying Deep Learning model specific to your data. You're leveraging the amount of data that we have trained in addition to specifically tuning for yours. It's only going to get better and better, to your point. >> It's going to happen, it's already happening. >> It's already happening, yeah. >> Swami, great slate of announcements on the Machine Learning side. We're seeing the products get all updated. I'm wondering if you can talk to us a little bit about the human side of things. Because we've seen a lot of focus, right, it's not just these tools but it's the tools and the people putting those together. How does Amazon going to help the data scientists, help retrain, help them get ready to be able to leverage and work even better with all these tools? >> Machine Learning, we have seen some amazing usage of how developers are using Machine Learning. For example, Mariness Analytics is a non-profit organization that its goal is to fight human trafficking. They use recognition which is our image processing. They do actually identify persons of interest and victims so that they can notify law enforcement officer. Like Royal National Institute of Blind. They actually are using audio text to speech to generate audio books for visually impaired. I'm really excited about all the innovative applications that we can do to simply improve our everyday lives using Machine Learning, and it's such in early days. >> Swami, the innovation is endless in my mind. But I want to get two thoughts from you, one startup and one practitioner. Because we've heard here in theCUBE, people come here and saying, "I can do so much more now. "I've got my EMR, it's so awesome. "I can do this solving problem." Obviously making it easy to use is super cool, that's one. I want to get your thoughts on where that goes next. And two, startups. We're seeing a lot of startups retooling on Cloud economics. I call it post-2013 >> Swami: Yeah. >> They don't need a lot of money, they can hit critical mass. They can get market product, market fit earlier. They can get economic value quicker. So they're changing the dynamics. But the worry is, how do I leverage the benefit of Amazon? Because we know Amazon is going to grow and all Clouds grow and just for you guys. How do I play with Amazon? Where is the white space? How do I engage, do I just ...? Once I'm on the platform, how do I become the New Relic or slunk? How can I grow my marketplace and differentiate? Because Amazon might come out with something similar. How do I stay in that cadence of growth, even a startup? >> If you see in AWS we have tens of thousands of partners of course, right from ISV, SIs and whatnot. Software industry is an amazing industry where it's not like winner take all market. For example, in the document management space, even though we have S3 and WorkDocs, it doesn't mean Dropbox and Box are not successful either, and so forth. What we provide in AWS is the same infrastructure for any startup or for my team, even though I build probably many of the underlying infrastructure. Nowadays for my AI team, it's literally like a startup except I probably stay in an AWS building, but otherwise I don't get any internal APIs, it's the same API so easy to S3. >> John: It's a level playing field. >> It's a level playing field. >> By the way, everyone should know, he wrote DynamoDB. As an intern or was that ...? (Swami laughs) And then SQS, rockstar techy here, so it's great to have. You're what we call a tech athlete. Great to have you on. No white space, just go for it. >> Innovation is the key. The key thing, what we have seen amazing startups who have done exceptionally well is they intently listen to customers and innovate and really look for what it matters for their customers and go for it. >> The biggest buzz of the show from your group. What's your biggest buzz from the show here? DeepLens? >> DeepLens has been ... Our idea was to actually come up with a fun way to learn Machine Learning. Machine Learning, it used to be, even until recently actually as well as last week, it was actually an intimate thing for developers to learn while there is, it's all the buzz. It's not really straight forward for developers to use it. We thought, "Hey, what is a fun way for developers "to get engaged and build Machine Learning?" That's why we actually can see DeepLens so that you can actually build fun applications. I talked about Hotdog, Not Hotdog. I'm personally going to be building what I call as a Bear Cam. Because I live in the suburbs of Seattle where we actually have bears visiting our backyard digging our trash. I want to actually have DeepLens with a pre-train model that I'm going to train to detect bears. That it sends me a message through SQS and SNS so I get a text. >> Here's an idea we want to do, maybe your team can build it for us. CUBE Cam, we put the DeepLens here and then as anyone goes by, if they're a Twitter follower of theCUBE they can send me a message. (John and Swami laughing) Swami, great stuff. Deep Learning again, more goodness coming. >> Swami: That's awesome. >> What are you most excited about? >> In Amazon we have a phrase called, "It's Day One." Even though we are a 22-year-old company, I jokingly tell my team that, "It's day one for us, "except we just woke up and we haven't even "had a cup of coffee yet." We have just scratched the surface with Machine Learning, there is so much stuff to do. I'm super excited about this space. >> Your goals for this year is what? What's your goals? >> Our goals for this year was to put Machine Learning capabilities in the hands of all developers of all skill levels. I think we have done pretty well so far I think. >> Well, congratulations Swami here on theCUBE. Vice president of Machine Learning and a lot more, all those applications that were announced Wednesday along with the Deep Leaning and the AI and the DeepLens all part of his innovative team here at Amazon. Changing the game is theCUBE doing our part bringing data to you, video and more coverage. Go to Siliconangle.com for all the stories, Wikibon.com for research and of course theCUBE.net. I'm John Furrier and Stu Miniman. Thanks for watching, we'll be right back.

>> Narrator: Live from San Jose, California. In the heart of Silicon Valley. It's theCUBE. Covering QuickBooks Connect 2016. Now here're your hosts. Jeff Frick and John Walls. (upbeat music) >> Welcome back here in San Jose, we're live at the Convention Center for the second day of QuickBooks Connect 2016. A thriving community, 5000 plus attendees here enjoying where there have been some fascinating keynotes and breakout sessions. And it's our pleasure to bring you some of the brightest and best minds in the QuickBooks community. And we have that with us today in the form of Jim McGinnis, who's the Vice President of Product Management at ProConnect. Jim, thanks for being with us. >> Thanks for having me. I'm excited to be here. >> I got to tell you, I wasn't aware of your stature until Jeff informed me of last year when the two of you met. He said, "I could barley have a conversation with him because the man's a rock star". People kept coming up, they wanted to take selfies with him and it was nonstop. So apparently, your cache goes well beyond theCUBE. >> It's very kind, but the truth is, the rock stars are our 150,000 plus pro-advisors from around the world. These guys are making a huge difference in the small businesses' lives. They come here, they connect with small businesses, with each other, et cetera. Sometimes it feels a little silly, but I'm just honored to get to spend time with them. >> But they wanted the selfie so good for you. They're not asking for Jeff and John. They're asking for Jim. >> In the near future I'm sure. >> Give me an idea, first off, your feelings about the vibe. You heard us talking about, a little bit ago but your thoughts about what you're seeing here and the growth of this show over the last three years. >> I was having a conversation, you know this started on the back of a notebook three years ago where we said, "We're getting big enough that we believe we need to have a show to bring folks together". But we want to be different. We want to be about making connections. So the name QB Connect was born. We wanted to be the place where developers, small businesses, and accountants come together and meet. The vibe is phenomenal. The vibe it starts early Monday morning when we do the accountant kickoff. They go into training. A lot of them get certified in QuickBooks online and advance certifications as well. It continues the next day, yesterday, with these fabulous keynote speakers. Last night with a great band, Third Eye Blind. Sometimes these bands say, "Am I seriously playing for a bunch of accountants"? But they always come away and say, "That is one of the best "shows we've ever done because the enthusiasm, the excitement". Everybody loves to be here. And then today continued. We had fabulous speakers on the stage again. People like Tony Hawk and Simone Biles. >> Yeah, so what do you want when people leave here, and we're going to get into accounting and what's going on certainly in your world. But I'm just curious. The takeaway that you want people to have as they go back to all corners of the globe, frankly. What do you want them to do, and how do you want them to feel about QuickBooks when they go back and do their 12-hour day jobs? >> Absolutely. You know, I want them to feel empowered to really make a difference in their clients' lives, which is super fun. There was a quote yesterday from America who said, "You are modeling possibilities for someone else and you may not even realize it". And boy, our pro-advisors from around the world really model possibilities. They save small businesses all the time. In fact, 89% of small businesses say they're more successful because they work with and accountant. How do I want them to feel about QuickBooks and Intuit? I really want them to feel like we're their partners. Scott Cook founded this company believing that we're here to make a difference. To change our customer's financial lives so profoundly they can't imagine going back. When I talked to accountants last night, today, that's what they tell me. They want to change their small businesses' financial lives so profoundly, they can't imagine not working with an accountant. We're perfect partners. That's what I'd like them to take back. >> It's so funny right? The dirty little secret everyone thinks an accounting show. It's not an accounting show. >> No. >> It's a small business show. It's really a building businesses and partnerships, and really creating that foundation for other people to build from to be more successful in really pursuing their passions. I think that's why the energy is so strong. >> You said it well. It's all about possibilities and it's all about connections. >> Excellent. So lets talk about some big global trends that are not only impacting QuickBooks and Intuit, and your customers, and the accountants but everyone all over the place. The two big ones that have recently just overtaken everything, mobile and cloud. Huge impact on what you can build, how you can deliver it, how people consume it. How have those really changed what you guys have built and delivered at QuickBooks? >> That's great. I'll start with the cloud side because I think that's where it all starts. All those desktops, they're coffins. The data is buried underneath your desk and it's unusable in so many ways. When the data moves up into the cloud, now you can make connections between industries. You can do industry benchmarking. Now the data can just flow seamlessly from one application, like QuickBooks online, through trial balance to another application, like our ProConnect Tax online. We're able to connect up all these fabulous developers who are building solutions that we would never be able to build the creativity that we see and all plug in this online ecosystem. It changes everything. On the mobile side, boy isn't it fun to see all the tweets going by? Our reputations are being built for us. The best we can do is curate them at this stage. The other is it's anytime, anywhere isn't it? This idea that you can make an appointment with your accountant and he or you would drive across town to get some bit of information. It's just too slow in today's world. Mobile enables us to collaborate constantly with our accounting professionals and the accounting professionals to collaborate with their clients. >> And really in a different kind of form and function because mobile is quick. I got two minutes standing in line at the grocery store at Safeway. I got a couple of minutes while I'm filling up my car full of gas. I'm waiting for the kids to come out of the coach's meeting after the soccer games. So it's a lot more frequent little bits of connecting in the way that we use mobile apps to interact with our world. >> Absolutely. Think about all the productivity that's unlocked with mobile. Usually it's a simple question. I need something now. Make an appointment, drive across town, it's miserable. Instead you can ask a question and all that's successful because the data's in the cloud. >> Jeff: Right. >> So what do you do then in terms of, at least with a client base that has a reputation for being a bit slow to move. And there's not an enormous number of early adopters, it's almost like show me. But yet when you have these new possibilities like moving to the cloud, migration there, people are going to get left behind if they don't. How do you convey that sense of urgency and get them to convert and get them to adopt and take advantage of these great products and services that you're developing for people? >> I'm going to answer that by saying I say it ain't so. I think accountants and accounting professionals are some of the most forward people that I've known. Now, they have to be responsible. They have to look out for their clients. And they're under a lot time pressure. I think that if there's been some slowness in moving it's because we haven't gone fast enough to create applications that really save them the time. Software's a tough business, folks. Because before in my previous life I was in Proctor & Gamble. You knew the benefit up front. Software comes with immediate pain and uncertainty about whether it's really going to deliver the promise, the benefit that's there. What we have to do is we have to help show accountants that the possibilities are there and give them immediate satisfaction that the time savings that they seek is there. When we do that, we've already seen it. They move quickly. >> So you're kind of talking about, in a way I think, this firm of the future concept, right? That as far as where we're going in this 21st century. So talk a little more about that and what it means, brass tax terms. When the rubber hits the road here, in terms of the products that you're providing people and the changes you think the customer's going to have to make in order to really fulfill this vision of the firm of the future. >> That's exactly right. Sometimes our accounting professionals or pro-advisors come to us and say, "Can't you make it simpler? "Can't you break it down into a few steps "so I can follow a roadmap step-by-step "and get there?" And we've done that a little bit with our concept of firm of the future. The first step is the importance of getting online. That first client, that's a little scary. Put your next client online, see what its like, enjoy the benefits, learn the new operating systems, learn the new workflows. And then the benefits start to unlock. You can manage them all in QuickBooks online account. You can start tying in the different applications. You can see all of your clients there. And as you get your second and your third, you start to enjoy that. The second part of our pilar I would say, the firm of the future, is we do believe that the billable hour it's not scalable. Of all of the time savings that's coming by moving to an online platform, gosh, you'd have to have a lot more clients in order to make as much money as you're making today. We believe accounting professionals deserve to get paid for the value they create. And that means moving to fixed fee pricing, it means offering a range of services, that means going beyond just typing in data and compliance to actually creating more value through advisory services. And then that's the third pilar right there. Once you're online, and you're making money by creating value through advisory services, you need to get your name out there. Become a specialist in a certain vertical. Help people around the country, even around the globe, know the value that you can create. And they'll flock to you. We've seen little companies start up with two people, this one in Canada, has gone up to I think more than 500 clients in less than three years because they followed the firm of the future approach. >> That's really interesting. It was apart of the keynote too where a lot of the entrepreneurs said they started with their family accountant or family friend who didn't really have a specialization in the industries that they decided to build. Then at some point they had to flip because the value of accounting is not data entry. And it's kind of old school that automation should help you get rid of the redundant low value activity to free you up on the higher value activity which is asset planning, and tax planning, and future planning, and inventory planning, and the things where the accountant can bring much more value to the relationship that aren't tied to how many hours did it take to prepare your return. >> That's absolutely right. We say that the most important feature we can add into QuickBooks is an accountant. Sometimes there's some fear of technology, I have to share what I read recently in the Wall Street Journal which is, machines have been able to beat humans at chess. But there's a concept called centaur chess, which is half machine half human. When a chess expert is combined with a computer can beat any computer. And that's where we are in the accounting profession too. All this technology is fabulous, but where it really starts to sing is when it's combined with an accounting professional who understands it and leverages to give advice only a human being can give. >> Alright so a couple more trends now that are coming, get your reaction. Machine learning, big one, big data obviously it's been around awhile but the machine learning and the augmented intelligence, AI. Some people say artificial intelligence other people say there's nothing artificial about it. >> That's right. >> It should be augmented intelligence. The impacts of those on your software and your customers? >> Great question. Let's be specific. Things like chart of accounts. We can do a pretty good job of estimating what a chart of accounts should be for a given vertical. But they always get modified by the accountants because they know better than we do. When a few of them start to modify it and few more, pretty soon we can leverage the wisdom of the accounting profession crowd to get the very best chart of accounts for any given vertical. What a great opportunity. And then you think about benchmarks. I was talking to somebody before about when all of the plumbing industry is on QBO. And accountants can go in and say this is what accounts receivable should look like for plumbing, for a plumber. Think of the power of that. But one thing we know is every small business says the same thing, but I'm different. No problem, tell me how you're different? And in fact, we'll find 10,000 others who're different, just like you. >> Just like you, right. (all laughing) So, just going forward, you've go tax pros on one side, you've got accountants on the other, never the twain shall meet. Now you're bringing them together. And the importance of that, the value of that in terms of making sure there's an integration, there's a collaboration for small firms? >> In my new role as product manager for the ProConnect group, that's the part I'm really really excited about. Last year we launched QuickBooks online trial balance so that the data flows into the trial balance and from the trial balance mappings can be done and it flows directly into the tax software with a little modification, a click of the button, you can file right from the tax software. But our accountants told us, I don't understand. I don't want to run two different client lists when somethings going on in the tax side of it. I want to know about it where I do my work, in QuickBooks online accountants. So this year we've integrated the tax software right into QuickBooks online accountant. And now we're dreaming a little bit. Where as we talk about moving to advisory services, when it's a separate business impacts in my books, impacts in the decisions I make here, then get handed over the tax side of the shop. Now when it's all one application, those insights come back from tax and say, I wouldn't do it that way. I'd lease that. I wouldn't buy it because you're going to be in a much better position from a tax standpoint. And gosh, your business has really taken off. You need to think differently about your quarterly estimates. Because otherwise you're going to find yourself in a cash flow situation come October. >> So you're getting ahead. You're not looking after the fact and reacting. >> It's advisory service. It moves tax from being a once a year event to being an ongoing relationship. That's exciting. >> Well Jim, it's that kind of vision that I think, makes you a rock star. And if you got time for a quick selfie. (all laughing) If we all just kind of, you know... >> I'm all in. >> Jim McGinnis, Glad you could join us here. I look forward to seeing you down the road too. >> Thank you very much. >> Jeff: Best of luck to you. >> Jim: I've certainly enjoyed it. >> It's a little blurry, we'll have to do another one here. Back with more here from San Jose right after this. You're watching theCUBE. (upbeat music)