from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante over the past 150 days virtually everybody that i know in the technology industry has become an expert on covid in some way shape or form we've all lived the reality that covet 19 has accelerated by at least two years many trends that were in motion well before the virus hit the cyber security sector is no exception and one of the best examples where we have witnessed the accelerated change hello everyone and welcome to this week's episode of wikibon cube insights powered by etr in this breaking analysis we'll update you on the all-important security sector which remains one of the top spending priorities for organizations and i want to give you a shout out to my colleague eric bradley from etr who gave me some really good data and some macro insights as well as some anecdotal data from csos for this episode let's take a look at the big picture first now for many years we've talked about the shifting patterns in networking moving from what's often referred to as a north-south architecture meaning a hierarchical network that supports you know age-old organizational structures well today the network is flattening into what they often refer to as an east-west model and the moat or perimeter it's been vaporized the perimeter is now wherever the user is and users are at home or they're at their beach houses thanks to kovid now this is a bad actor's dream as the threat surfaced has expanded by orders of magnitude and as we've said in the past the adversary is well funded extremely capable and highly motivated because the roi of infiltration and exfiltration is outstanding the cso's job quite simply stated is to lower that return on investment now the other big trend that we see is that the cloud and sas are reducing reliance on hardware-based solutions like traditional firewalls because so many workers are now at home they're in their accessing sensitive data identity and endpoint security are exploding xdr or extended detection and response and zero trust networks are on the rise organizations are increasingly relying on analytics and automation to detect and remediate threats you know alerts just don't cut it anymore i need action and so to do so they're turning to a number of best of breed point products that have the potential to become the next great security platforms and this is setting up an epic battle between hot startups that are growing very very quickly and entrenched incumbents that really aren't going to go down without a fight finally while security is clearly a top spending priority customers and their cfos continue to be somewhat circumspect with respect to how much they allocate toward security budgets especially in the context of a shrinking i.t spending climate that we have said is dropping between five and eight percent in 2020. now security is critical but even in these times spending is governed by these tight budgets well cyber remains a top category in the etr taxonomy in terms of its presence in the data set what this chart tells us is that cios and i.t buyers have other priorities that they have to fund this data shows a comparison of net scores over three survey dates october of last year april and july net score remember is an indicator of momentum which is calculated by subtracting the percent of customers spending less on the technology from those spending more it's more complicated than that but that's that's the basics and you can see that at a 29 net score the security sector is just one of many priorities that i.t buyers face now remember this is the july survey and it's asking customers are you planning to spend more or less in the second half of 2020 relative to the first half and it's a forward-looking metric so what may be happening here is that the height of the lockdown and in the u.s anyway and the pivot to work from home organizations were spending heavily and are now fine-tuning those investments and maybe addressing other digital priorities let's look back and do some pre and post-covet assessments of various players within the etr data set i'm gonna go fairly quickly through these next slides but i want to give you a perspective as to how the security landscape and the vendor momentum has changed in the past eight months first i'm going to take you back to the january data set we actually originally did this exercise last year and then we updated it right at the beginning of 2020. the chart shows the top-ranked cyber security companies based on two metrics the left-hand side sorts the data and ranks companies based on net score or spending momentum and the right-hand side shows the ranking by shared n which is a measure of the pervasiveness of a company in the data set i.e the number of mentions that they get in the sector and what we did is we gave four stars to those companies that showed up in the top of both of those rankings and two stars to those that were close so you can see that microsoft splunk palo alto and proofpoint as well as octa and crowdstrike and then we added z scalar in january as new and then cyber arc software all got four stars then we gave cisco and fortinet two stars now this next chart shows the same thing at the height of the u.s lockdown now you may say okay what's the difference there's still microsoft palo alto proof point octa cyber arc z scaler and crowdstrike at four stars with cisco and fortnite having two star stars splunk fell off but that's it well what's different is instead of making the cut the top 22 which we did last time we narrowed it down to the top ten in order for a company to make that grade so if we had done that in january octa crowdstrike zscaler and cyberark they wouldn't have made the cut but in april they did as their presence in the dataset grew and we strongly believe this is a direct result of the work from home pivot crowdstrike endpoint octa identity access management z-scaler cloud security and they're disrupting traditional appliance-based firewalls now just to note we placed dell emc which was rsa and ibm in the list just for context now let's take a look at the most recent july survey now a lot of i'm out on a limb a little bit here because many of these companies they haven't reported yet so we don't have full visibility on their business outlook but we show the same data for the most recent survey the red line that you see there is the top 10 cutoff point and you can see splunk which didn't make the cut in april is back on the four-star list it's very possible buyers took a pause last quarter and focused attention on work from home but splunk continues to impress as it shifts toward the subscription model that we've talked about in the past splunk has a very strong hold on the sim space but everyone wants a piece of splunk especially some of the traditional firewall companies who they're seeing their hardware business dying so we're watching the competition from these players but also some other players like tennable now proof point fell off the four-star list because its net score didn't make the top ten crowdstrike cyber arc and zscaler also fell back because they dropped below the top 10 in shared in but we still really like these companies and expect them to continue to do well you know it could be some anomalies in the survey but we're trying to be as transparent as possible with you share the data listen to it interpret it and really adjust our models accordingly each quarter now let me make a few points and try to interpret what might be happening here first i want to point out octa pops to the top of the net score ranking overtaking crowdstrike's momentum from the last survey now one customer in the financial services sector told eric bradley on a recent then we're seeing amazing things from octa but the traditional firewall companies are stepping into identity they may not be best of breed but they have a level of integration and that's appealing to this individual this person also specifically called out palo alto and fortinet is trying to encroach on that space so keep your eyes on that now crowdstrike has declined noticeably which surprised us z z scalar is actually showing more momentum relative to the last survey so that's a positive palo alto and microsoft are consistently holding serve and continue to be leaders proof point and cyber arc are showing a bit of a velocity drop and sales point and tenable are also catching our attention in this survey and of course sales sale point which is identity management had a great quarter and reinstituted its guidance giving us the benefit of hindsight on its performance so it was actually pretty easy to give them two stars now just a side note by the way we've cut the data here with those companies that have more than 50 mentions in the sector we didn't do that the first time we did this we allowed companies with less than 50. so we're trying to tighten that up a bit so we still maintain strongly that you're seeing cloud endpoint and identity as the big security themes here csos need tools to be responsive they don't want to just get an alert secops pros would rather immediately shut off access and risk pissing off a user than getting hacked and companies are increasingly turning to ai to detect and they're relying on automation to remediate or protect and fence off critical resources let's now look at the two players or players in our two-dimensional view followers of this program know that we like to plot vendors within a sector across two of our favorite metrics net score or spending momentum which is a simple metric that tracks those spending more versus less on the technology and market share which measu measures a vendor's pervasiveness in the data set and it's calculated by taking the number of mentions a vendor gets within a sector divided by the total responses what we show here are the key security players that we've highlighted over the last several quarters let me start with microsoft microsoft has consistently performed well in the security sector as well as other parts of the etr taxonomy as you know they have a huge presence in the survey which is indicated on the horizontal axis and you can see they have a very solid net score which is shown on the y-axis impressive for a company their size now one interesting thing is you don't see aws in this chart and it's because aws and microsoft at least so far have somewhat different strategies with respect to security microsoft with its long application software history and sas presence across office 365 and sharepoint etc with active directory has been really focused on selling security solutions to directly protect its apps they have offerings like defender atp which is advanced threat protection sentinel which is microsoft sim cloud offering azure identity access management and the company's really going hard after this space now aws of course prioritizes security but they don't show an etr data set the same way microsoft does it's almost like aws is hiding in plain sight look aws has always put a great deal of emphasis on security and securing its infrastructure like the s3 buckets and it's you know it announced iam for ec2 way back in 2012. and last year at its reinforced conference you saw an impressive focus on security in a burgeoning security ecosystem in fact when you think of getting started in aws you really think about three things ec2 s3 and iam so i'd expect to see aws really become more prominent over time in the data set now i'll spend a minute talking about octa for the first time since we've been analyzing the security space with etr data octa has the highest net score at 58 percent it had consistently been crowdstrike with this moniker and the momentum lead the company though is dropped in this quarter survey and that's something that we're watching and by the way we're not implying that octa and crowdstrike are direct competitors they're not now as you can see nonetheless that crowdstrike z scalar and sales point sale sale point show very elevated net scores and we've plotted tenable here which is also showing some strength so you can see the respective positions of proof point and fortinet these are more mature companies they were founded in the early part of the century so you'd expect them to have somewhat lower net scores given their history and maturity and then there's cisco they've got a huge presence in the data and big in security cisco's doing really well in that space it consistently grows its security business in the double digits each quarter and it's a real feather in the cisco portfolio cap this is important because cisco's traditional hardware business continues to come under pressure splunk we talked about a lot and it's no surprise at their leadership position but i want to talk a little bit more about palo alto networks here's a company that we've talked about quite a bit in the past they are a tier one player in security they got great service csos want to work with them because they are thought leaders they're like a gold standard and have an impressive portfolio of great solutions but their traditional firewall business is coming under pressure for the reasons that we discussed earlier now palo alto has expanded its portfolio into the cloud and with prisma the company's suite of security services it will maintain a leadership position in our view but palo alto networks as we've discussed had some missteps with its product transition its sales execution and some of some challenges with its pricing models and it hurt their stock price but we've always said that they would work through these issues and that that was a buying opportunity the other thing about palo alto is you know they're considered the expensive choice you got to pay for that gold standard but that's what customers you know will tell us and so you're paying up for those top tier offerings but that's a sort of two-edged sword for palo alto here's an example why people often compare fortinet to palo alto and as we've shared in previous segments the valuation divergence between palo alto and fortinet where the the latter was making a smoother transition to its future and people often tell us that fortinet well you know maybe it's considered not as elite as palo alto they are a value choice their stuff just works and fortinet is a great alternative to palo alto and that has served them very well now let's take a closer look at the valuations of some of these companies we started off this segment by saying that the pandemic has affected every sector and especially cyber security so the next chart that we're showing here is the progression of key valuation metrics since earlier this year what we show are the valuations of nine of the companies in the sector since mid-february the data tracks their respective valuations their revenue multiples their growth rates in both value and revenue revenue growth is shown in the last column for the most recent quarterly report now the companies in red have yet to report the report any day now so he said i'm flying a little bit blind here and we'll have to take a look after the earnings to see how the survey data aligns with the actual results but let me make a few points here first here's the s p in nasdaq performance you see it in february in june and august pandemic recession what are you talking about you'd never know it looking at this data the nasdaq especially is up 14 said since mid february which is quite astounding next i want to come back to the discussion about palo alto and fortinet fortinet already has reported this quarter and palo alto has not but you can see based on the revenue multiples highlighted in red that the valuation divergence is starting to shrink a little bit and we'll see if that holds up after palo alto reports now the big eye popper in this chart is the valuation increases from february to august for octa crowdstrike and z scalar 52 67 and 104 percent increase respectively now you can't say we didn't warn you that these companies were all well positioned when we reported last year and in our january episode but i did say actually to be honest in the last episode that these three i thought were getting a little expensive that was a couple months ago and since then they've continued to run up so if you've been waiting for an entry point based on my advice well i'm sorry for that but look at the revenue multiples look at the expansion in the orange octa goes from 34x to 52x crowdstrike from 39x to 66x z scalar 25x to 43x i mean wow let's see what happens after these three report by this time i would have hoped that they'd taken a little breather maybe over the summer and you could have jumped in to these stocks but they just keep going up and despite the decline in net score for crowdstrike i still really like all three of these companies and feel that they're very well positioned from a product standpoint and customer feedback perspective and finally i want to mention sale point which we said last time was one to watch sale point crushed its quarter bringing in some large deals and providing forward guidance nearly a 50 percent valuation increase since february in a revenue multiple expansion from last quarter where the street last quarter wasn't really thrilled with their numbers but identity management is hot and so now is sales point from the streets perspective the last thing i'll say here is watch the growth rates expectations are very high for some of these companies and the street will cream any of them that misses now that may be your opportunity to jump in because i like these companies i think they're disruptors but as always do your research and watch out for the big whales trying to freeze the markets on these guys all right let's wrap up we've covered a lot of ground today and surf the landscape a little bit so look the trend is plain as day the move to sas is entrenched and by the way this isn't necessarily all good news for buyers cios and cfos tell me that the dark side of capex to opex is unpredictable bills but the flexibility and business value gained is outweighing the downside and every vendor in this space is transitioning into a sas and annual recurring revenue model we believe the remote work trend is here to stay organizations are re-architecting their business around work from home and we think that they're seeing some real benefits they've made investments and it's driving new modes of work and productivity they're not just going to throw away those investments why should they what just to go back to the old way it's not going to happen and if we as we've said previously look the internet it's like the new private network so you've got a question vpns and sd-wan they start to look like stop gaps and of course you know the cloud endpoint security cloud-based iam they are clearly winning in the marketplace you know we're also seeing new security regimes emerge where the cso and the secops team are not this island we we've seen even some csos falling back under the cio which used to be taboo he used to be thought of that's like the fox guarding the hen house but this idea of shared responsibility is not just between the cloud providers and the secops teams because security is a board level priority everyone in the business is becoming more aware more attuned and despite the millennials fascination with and undotted courage when it comes to tick tock i digress now the last two points are interesting i remember reading a post by john oltzek who was an esg security analyst and he predicted last year that integrated suites would win out over the buffet of point products on the market and you know generally i i agreed with that assessment but look at least in the near term and probably mid-term that doesn't seem to be happening as we we've seen these hot companies really take off the ones that we've highlighted now these companies have ambitions beyond selling products and they would bristle at me lumping them into point products their boards are going after platform plays so they're on a collision course with each other and the big guys this should be fun to watch because the big integrated companies are well funded they got great cash flow they got large customer bases and and i've said they're not going down without a fight so i would expect eventually there's going to be more of an equilibrium to what seems to be right now a bifurcated and unbalanced market today so you're going to see more m a activity expect that however at these valuations some of these companies that we've highlighted they're becoming acquisition proof as such they'd better keep innovating or they're going to be in big trouble all right that's it for today remember these episodes are all available as podcasts wherever you listen so please subscribe i publish weekly on wikibon.com we've added in the wikibon menu bar a breaking analysis link that has all the episodes in there i also publish on siliconangle.com so check that out and please do comment on my linkedin posts don't forget to check out etr.plus for all the survey action get in touch on twitter i'm at d vellante or email me at david.vellante at siliconangle.com this is dave vellante for the cube insights powered by etr thanks for watching everybody be well and we'll see you next time [Music] you

okay we're back at SiliconANGLE comms continues coverage of vm world 2010 in the cube with a discussion with venture capitalists who are investing in all the next hot startups software companies infrastructure companies we all know three par two billion dollars is big big wins out there and data domain was a big acquisition and we're here with three venture catalyst to my left is charles beeler from El Dorado ventures and he's done a bunch of storage cloud deals Pete sonsini from NEA and ping li from accel partners so guys welcome welcome to the segment so first question we just go down the line real quick on a scale of 1 to 10 how would you rate the overall investment climate for startups in cloud startups the cloud I'd say pretty close to seven eight nine you know the negative right now is a little bit more around the funding environment than the opportunity for the companies and I think you as venture guys you really have to go to look past that and see the opportunities for the businesses and fortunately got three groups here of capital put to work so you can actually fund these things it's the biggest challenge we're seeing out there right now great Pete yeah i agree i mean it's it's definitely 89 if there's a hot sector or enterprise related it's certainly cloud cloud related you the backdrop is relates to overall venture climate you know casa paypal and affects the investment in this area a little bit but everybody knows this is a big change the ecosystem is creating tons of opportunities for new businesses and so everybody's very focused on it really minute they're missing it yeah i agree i think in terms of areas of excitement enthusiasm with entrepreneurs it's definitely nine or ten i think it it's not just on the infrastructure side as well i think if you look across you know our portfolio i'm sure it's the same with Pete and Charles you know three quarters of the companies are actually built on cloud infrastructure now so there's no more servers or data rooms at any of the startups and we work with so i think there's up and down the stack from the applications down the infrastructure there's a lot of enthusiasm for what the cloud can bring great same same same process right down the line and another question is how do you guys evaluate a company these days because it's so easy to fake out a VC if they're not smart about throwing some clouds stuff up there making it look great at a rails front end doing some voodoo I mean is there a new model of evaluating an entrepreneur or startup the old days it was hey what's Stanford at a PhD look at this unique IP with a patent now it's a really fast Market things going crazy how do you guys look at deals and evaluate entrepreneurs and startups I for me it still comes down to the team and I don't really care where they went to school I care what they know about the market they're going after you know to the extent they're going they're going after something in virtualization and cloud layer storage the pedigree matters a lot at what are they done before that shows they understand the market they're going after I'm hoping that the operators we back know a lot more about the market they're pursuing that I could so if they're really good at it you know i'm not going to keep up on that piece of it i just want to make sure they understand it to understand how they fit the ecosystem you can drive it and the stage we invest it really is all about the team because good teams have good ideas and they know how to pursue them he yeah I mean you can be aware of the trends but you don't know everything about everything there's no way you possibly can so you you try to narrow it down to you know generally speaking it's its people its markets its business traction is technology I think at the end of the day it comes back to those same four things most the time and everybody's got their own personal filter as to what they like to optimize around I think for the deals that that will do in one of those four categories you know and others i think one of them really has to be out off the charts to grab your attention to want to do the deal but i think it still goes back to you know people technology markets and and the passion behind the entre nerd is the ant really have that privileged insight and the opportunity they really know this market and this opportunity and how to exploit it better than everybody else and being the gauge of that is you know at the end of the day that that's probably the most important thing because as I say you're not going to know you're not going to know everything everything about every and you can't expect you anywhere close to that so you try to find those those individuals that really do have that key in so it inside the exploited opportunity so that's how we would look at it today thank you yeah i agree i think the fundamentals of what we look for in a company hasn't really changed i think the sectors and trans as you as you noted have changed a lot and i think there's still the constant tension that we see between kind of features and actual category defining breakdown companies but i think that is a you know a lot of times when you see a new market like cloud computing the first wave of a lot of the ideas are more features or trying to evolving existing platforms and then the next generation of the emerging ideas are are going to be more kind of the category platform type opportunities so trying to kind of parse out which one is which is not an easy task is something we spent a lot of time on I think the other big changes capital efficiency I think a lot of these companies are able to get to market with a lot less capital because the tools and resources whether it's open source products or you know things like ec2 s3 really change how companies can get to market much faster so that's something we do look for if you can build it and get market faster let's see it as opposed to building for three years and then created the markets there I mean capital efficiency is a great entrepreneurs of great at bootstrap so they love clouds okay I can do a data center for 20,000 in three countries yeah so let's talk about that i mean let's a couple efficiencies one thing and you guys provide a lot of funding but now momentum has always been the thing you could be capital efficient and never never make the market so it's about momentum where do you guys see the most momentum in cloud cloud related things we have end-user environments with the beady eye stuff at some desktop mobile obviously in the middle where that model is changing and an infrastructure that network at the plumbing storage what do you guys see the most momentum and most fertile for entrepreneurs to stay a safe harbor if you will do you see that anything out there I mean clearly the place you're going to see the most momentum is the closer you get to the end user of a product that if something's getting adopted quickly and wrapping quickly and if you're hosting that Klaus a lot easier to get deployment continue to deploy and meet that scale I think as you look at more the infrastructure the guts and things that are going on it we're pretty big believers that while virtual desktop is still early in terms of Enterprise usage we think it's at the point now with technology has evolved far enough that it's ready to go we made a bet and recently we just we think that's a market that's starting to gain momentum and when it happens we think will happen quickly I think in a lot of these other areas there are great opportunities but in some ways it's still company-specific if someone really figures out how to take advantage of a technology and leverage something whether it's software infrastructure Network it's more the company getting it and getting it right and you're seeing that today and you mentioned some of these acquisitions it's companies you figure that out understood how to get that wave and catch it and hit it at the right time yeah I mean I think that you know you want to get it you want to get in before the momentum hits I mean that's really where the money's made in venture capitals is getting in ahead of the ways before they all head and you know so so there's certainly exciting there's plenty of excitement around the cloud to spread around and and you know you point out what year as you like the best which ones yes I think that you point out platform as a service and private clouds there's a lot of excitement around there right now I think it's because it's you know it's kind of open field it's is there's huge growth prospects ahead of it there's no real dominant player and the venture investors mines kind of go why you know kind of go crazy thinking about where you know how big this opportunity could be without really that many proof points category not for him you're saying categories not formed yet one two and three I'd approve you know it with private clouds taking private class or as an example there's clearly a lot of interest and talk around IT organizations about private clouds people are talking about it how many deployments are there there's actually you know not you know not commensurate with the hype and so you know you have to discount that back and so you know there's still a lot of interest there's there are always going to be interest from venture investors and things like that but the end of the day you know you're taking a leap of faith that i materialized and something like that it's just not there yet yeah well you had data domain in your confirm a date of domain acquisition that was a big exit three far just went when or going to HP it looks like so you know there's big deals to be had I mean big big meals you know there's you know as it relates to virtualization and cloud is really shaking up the entire that we all know that we all know it's it's a big change in all these areas are presenting huge opportunities for new businesses and really novel technology to come in and capitalize on them and even though traditional areas like storage which is you know storage I mean it's it's boring old storage but no it's crazy yeah there are the rules exactly but it's crazy things happen and there's a lot of innovation be had as it relates to cloud and yeah Charles knows with companies that he has this thing so paying you you're on the board of an investment that you have a cloud era which we were familiar with their friends of ours in Palo Alto they serviced the Hadoop platform and it's an open source project commercializing it but you have big cloud players out there that have a product that they don't sell they just use like Facebook Google Amazon so so there's a whole nother world of big data and data is the big themes in this conference and the world what is your view of that trend of data the tsunami of datas Michaelson would say at Cloudera what is your view on that yeah I think it ties really well into a lot of the conversations I think you got your having around virtualization and cloud computing because if you look at what cloud computing is doing its actually reinventing the entire computing stack from it was there was mainframe whose client server there's web and heathers cloud computing so I think there's opportunities that all the layers of the stack i think what cloud era is focused on is around the data layer and i think what you mentioned that the Big Data trend is one that one could argue start in a web world because they were pushing the envelopes of data when Facebook Yahoo and google were collecting click streams and then trolling the entire web to figure out you know what's what's relevant to two different people i think that amount of data has really pushed the envelope with today's database technologies i think what cloud air and Hadoop is trying to do is change the boundaries of what data can do and what database technology and data management technologies can do so I think one thing we've seen a clatter is everyone's got big data we most of the customer we talked to always start off with a terabyte before the end of the conversation they find it petabytes so the reason why people didn't have all the data back place is because they were throwing them away there's no cheap efficient way to store and derive value from semi-structured or unstructured data so they were kind of going to waste I think now with technologies such as a dupe you can really change that that paradigm around and you can do analytics you can do a lot more data data management capabilities you couldn't do before it's hard to think of a better guy than Michaelson to run something like that yeah he's a good he's a good guy great guy the question about scale and startups dynamic so let's talk about from a starter's perspective they're out there they can deal with in Super Angel has been in the news we've covered that in SiliconANGLE you guys are venture capitalists and you deal with big deals if ficient to get started off the ground what advice you have to an entrepreneur out there they want a good bc they want to have someone's not going to screw them over hey what someone is going to grow with them help them navigate and reduce their risk as well and go to the market be successful so what advice do you have to offer up there about navigating the I need to get financed I have a prototype I'm going to fill this white space of a VMware platform or do this and that what was your back was your eyes by speak I'm sure we agree that you just go to El Dorado start there do your series be with one of these guys a lot of ways it really depends on what your business is we talked about capital efficiency but if you're building a storage solution if you're building complex technology it's going to take 12-18 months to build and get to market you got to be funded to get through that point the hardest van sings today are the series b financing for these companies if you don't appropriately find your company through the series a give yourself time to get to market get the product out have some customers work with it it's going to be really hard to raise a good following financing around as an entrepreneur you suffer the most frankly because you've suffered dilution from that more capital efficient deals you know and really smart super angels say the same thing the best deals they've ever done they may have done it on their own initially but most of those over time taking of capital that to not raise venture money would be a very challenging thing to do it to really build it a profile you're saying if you want to build a real big business go to a serious VC absolutely and if you need to start if you want to start small at few million bucks because your idea only takes that to start great most of the companies that we're seeing the cloud space are not companies or didn't get to profitability on two million dollars and as an entrepreneur if you really think that's going to happen you should look very hard to your business and look at all the comps around your business and see how many of them were able to do it and if none of them were you guys question what's so unique about our model it's different or show to be planning to get more tableau most most most hunters don't know that tend not to do follow on financing so that if it's an intensive deal that needs more cash they may not pony up more right I mean I would just add that you know when you're as an entrepreneur looking at a venture for an angel you need to pick a firm that is going to have some money to me to be there for successive financing I mean people don't knocked out of the park every time after their first financing usually they have successive deals and is it up and down drive so you need to have a firm that obviously has money and as deeper as you know there's obviously constraction value where they was very well there's certainly value at the point I was making is that there's contraction in the venture business right now and so there's a lot of pressure on firms you aren't can be able to raise future fun so you got to feel good there's going to be funding there for you down the road is obviously obviously very important and you need to feel good about who you're working with obviously and yeah I mean that the value add is important i mean the network that the firm brings the experience they have in building companies is actually we feel like it's worth something we've we've done that before and you gotta bail you got a lot of success and we think that that can helps i mean we have a bench of entrepreneurs they can you know speak on behalf and hopefully say the same thing but that's the way we look references are a big thing right you're saying but a big part of that value added speed said is having access to additional capital from your initial funding sources knowing that when push comes to shove if things are going well but you're having a hard time raising money out in the market you can come back to your existing group of investors and continue to scale a business the way it needs to be scaled or should be scaled to be successful and that's that is a component of being value add to those companies being there when they need you to really support them through those time paying you work for a blue chip in Excel there you know earned the reputation over the years I say the facebooks a big investment and they got slew of other great investments and you've got a good tracker green cloud what do you say to the folks out this a no just go Super Angel there's some dilution not just in capital but reputation don't you think you know I i think the angels are or the super angels are an important part of the ecosystem for startups I think we work with a lot of angels we have angels in cloud era we have angels a lot of our companies so I think they definitely provide an important you know segment of the creation of startups more and more today than ever because the capital just to fund no I think I think they provide value add just like just like a VC well I think for me it's more the entrepreneur's to decide what they want and where they want the company to go and I think and figuring what the business needs should be able to help you figure out if you go with angels you go with VCS you go with both no combination you bring people at different times I don't think there is there's one formula but I do encourage entrepreneurs not to feel there's only one way to do it there's probably more than one way to do and take the time to figure it out i think the most important thing is get to know the people that will be investing in your company spend the time to get to know the VC we're all very accessible we return emails phone calls whatever it takes and that's true for the angels get to know everyone and I think that will help you make the right decision I saw a quote recently that said it's very hard to get an investor to come into your company but it's ten times harder to get them out and in thanks point me you got to get it right because you know they can absolutely kill a company if you get the wrong ones in yeah and you run out of cash too you're at a business I have that too somewhere I've heard it quite never seen a quick get go to business we have money in the bank Pete guys can you guys comment on facebook what is the Phenom of facebook obviously it's a cloud play for themselves it's a huge platform growing at scale I know ping your company has the big data business and trying to figure out clustering google has that but all my facebook and particularly growing very short history is that a cloud play for enterprises to look at is it a unique data point is that cloud any any takers on that question I'm going to look at the expert the last time I sat on a panel if King was three weeks after they did the initial investment in facebook and I still couldn't get in because it was only for college I mean they are operating a scale they use our open source or writing their own code it is a cloud kind of play yeah I mean I think you know we've had a lot of conversations with different Enterprise architects who are curious in terms of how Facebook has built their data center I think whether it's you know Facebook Google or Yahoo or Amazon it's it's very interesting see how these internet data centers are becoming thought leaders in terms of where some of the new groundbreaking technologies are whether it's in the storage layer networking or compute layer you know Facebook's an early adopter of a lot of these technologies just because they were pushing the boundaries of what can be done with you think it's a proof point though of what as a road map for the enterprises to look at or is it just a unique one-off I I think it is I think you have to be careful about just transplanting things that were done for a consumer web property and all the nuances that you need for an enterprise environment but I think absolutely just like a lot of consumer companies like Facebook to use enterprise technologies right so i think it's just an evolution of you know what they're building will be adapted i think a lot of private cloud stuff that we're investing in is very much borrowing from a lot of the clinical public cloud understandings and then bringing that to an enterprise environment so you talk to the enterprise IT guys and the cios are saying to the architects we want one of those amazon things inside driving yeah that's what they're saying right so I think I think there's a I think that's one sure i think the other trend is the episode we don't want them to have it we don't want them happen right and any other things applications are getting rewritten for different ways in other words people are building applications for ec2 and s3 that our web-based cloud type applications as more of these type applications get built they're going to end up in the enterprise and then the infrastructures gonna have to adapt to the application so i think that cycle just keeps going peep peep for you question for you you've been in the evil attic space in the enterprise obviously an IT was a sector that kind of went dark from a venture perspective seems to be coming back with cloud how are the enterprise IT changing as a marketplace when I say market I mean like a market for entrepreneurs what what do you see that's different now from when you were in the enterprise and you were to HB you worked at some startups in the enterprise it's changing what a what do you want him you know when I was I mean before you're in the venture you know six seven years ago the whole social media you know consumers ation of IT was not really happening so that's a huge change that's impacting enterprise IT landscape but it's it's got you know IT executives running around with their hair on fire and how to deal with so that's in the world of IT that's a huge change since I was in the business eight or nine years ago and it's still you know it's a nun saw there's nobody knows exactly how you know what the right answer is with all these these iPads and so forth entering the world so at the same