>>from >>Around the globe, it's the cube with digital coverage of IBM think 2021 brought to you by IBM. >>Welcome back to IBM Think 2021 we're gonna dig into the intersection of finance and business strategy. My name is Dave Volonte and you're watching the cubes continuous coverage of IBM thinking with me is brian Hoffman is the chief operating officer of IBM Global financing, brian, thanks for coming on the cube today. >>Good morning, Great to be here. >>Hey, good morning. So I think we've heard a lot about the impact of hybrid cloud ai digital transformation and I wonder as a finance person in a former CFO, what do you see? And how do you think about some of the key considerations and financials and strategies that are supporting these major projects? Right? We got to come to the CFO and say, hey, we want to spend some money and here's the benefit, here is the cost. How can see IOS and their teams work with CFOs to try to really accelerate that digital transformation. >>Great question. And actually that question, I think I might have answered it a little bit differently, like two years ago, a year ago before the pandemic, I think it's actually changed a little bit with pandemic in my experience is the CFO people would come into me for projects and there's three ways you can justify it, but you can justify short term immediate, quick payback kind of hitters, you can justify it with, you know, improving our efficiency or effectiveness, um you know, reducing costs in the long run, making the client experience better or more from a strategic point of view, um you know, growing revenue getting to new clients, improving margins right? And so the the hybrid cloud transformation journey really still addresses those three things and when we come in, a lot of people focus like I said, on that third strategic point, but but all three of those come into play, and what's really interesting now is is as I'm dealing with it, I'm talking to other Cfos. The pandemic is really, if you will throw in a wrinkle in here, right? So the clients that I'm talking to, the IBM clients, they have to operate their business very differently and and their business models, some of them are changing clearly. Their clients, their business models are changing their operating differently as well. Um So, so our clients have to react to that and Hybrid Cloud and that that that type of of a structure really can support that. So there's really an emphasis here now to act with much more speed on this journey to get moving on it to get there because you have to make these changes and doing those two things in concert really has a ton of business value. >>Yeah I mean the cfos that I've talked to in the C. I. O. S. It's really kind of industry dependent, right? If you're in airlines or hospitality was like uh we got to cut costs. A lot of organizations said okay we're gonna support remote workers put in V. D. I. Or deal with endpoint security or whatever it was. But we're actually gonna double down on our digital transformation. This is we're gonna lean into an opportunity for us to come out stronger. How did you guys approach it in terms of your own internal digital >>transformation? Yeah. We we we were working on our digital transformation uh a little bit before the pandemic and it kind of followed those those three uh those three items when they when they first started implementing it, they came in and said hey if we can if we can move to a cloud platform, our infrastructure savings will be pretty significant. You know the I. T. Infrastructure savings will be 30 to 40%. So you know, quick payback CFO types love that. So you know, we went forward with that. Um but then quickly we saw the real benefits of moving to a hybrid cloud strategy. So just as an example as we were making some of these changes, we found a workflow tool in one of our markets in europe, that was a great tool and uh if we wanted to implement that across the business um in the old days, You know, we're in 40 countries, we've got 2500 employees, three lines of business. It would have been very complex because our operating structure is is very robust, very complex. Um Probably have taken a year, two years to do that. But since we are now on a cloud platform we got that rolled out that workflow tool rolled out across our business in months, Saving 20-30 of of workload. Being much more um efficiently getting to our clients and reacting quickly to them. And in fact that tool got adopted across IBM because that cloud platform enabled that to happen. And then the great thing which I didn't even realize at the time but now thinking more strategically um are my I. T. Resource earlier was running at about 50 50 50 people working on maintenance. The kind of things with 50 on development as we've now transition to this cloud. My I. T. Resources now 70 plus percent dedicated to new development. So now we can go attack new things that really provide customer value in the pandemic. You know the first thing to look at is can we get into more um you know electronic contracts, E signatures, things that would provide value to customers anyway. But in the pandemic is like really a significant, you know differentiator for us. So all those things were enabled by that journey that we've been taking, >>interesting. I mean most of the CF I uh in fact every CFO I know of a public company took advantage of cheap debt and improving their balance sheets. And liquidity is not the problem today, especially in the tech industry at the same time. You know I'm interested in how companies are using financing. They don't want to necessarily build out data centers but they do want to fund their digital transformation. So what are you seeing in terms of how your customers are using financing? You know, what's the conversation like? What advice are you giving? >>Yeah. So um you know, it depends a little bit on the type of customer, like you said, you know, we we deal with a lot of the biggest, strongest customers in the world. And, and as we deal with them, financing really helps the return on their investment, right, aligning the payments of those cash flows for when they're getting the benefits. Uh And and we see a real good value in improving the return on those investments in helping, you know, if it's something that's going to go to the board that really makes a difference to them. Uh So, you know, that that's always been a value proposition. It continues to be. Um The other thing that's helping now, like you said, is even in this environment, people want to accelerate this transition. Um but it's a, it's a, it's a big time of uncertainty. So, you know, some of the smaller clients, some of the more uh you know, the industries that are a little more cash constrained airlines, et cetera, you know, they're looking for the the immediate cash flow benefits. Um But many of the cfos are saying, hey, listen, you know, I can I want to go as fast as I can help me put together a structure that lets me, you know, get this in place as quick as possible, but not below my budget is not make me take too much risk in this time of uncertainty, but keeps me moving and I think that's where financing really comes in as well. Um And we're kind of talking much more about that value proposition than just if you will be improved ri proposition that we've had all along. >>I want to talk a little bit more about IBM global financing. I mean, people, a lot of times people misunderstand it. You know when you look at I. B. M. S. Debt, you gotta you gotta take out the piece that IBM global financing because that's a significant portion and that's sort of self self fulfilling. But what do people need to know about IBM global financing, >>We actually run three different businesses and we've been transforming our strategy over time. So you know right now with with IBM being all in on hybrid, we are very focused on helping IBM and IBM clients on this digital journey on IBM growing their revenue. Um you know, we we in the past have been more of if you're really full service. It finance are doing a lot more than just IBM but we are really focused now on on helping IBM. So I think the best thing for for IBM clients to know is as you're talking to IBM about the total solution, the total value profit IBM brings that financing, that cash flow solution should be embedded in what they're looking at and can provide a lot of value. Um You know, the second thing I think most people know is we provide financing for IBM s channel, so you know, distributors, resellers etcetera, if you're an IBM distributor or reseller, you know about us, because just about 100% of IBM partners use us to provide that working capital financing, uh you know, we have a state of the art platforms were just so integrated with them. Again, I don't have to I don't have to do a sales pitch on that because they don't know us. Um and the third one just because people might not realize this is, we do haven't we call it an asset recovery business, um it's a pretty small business, you know, it's bringing back equipment that comes off lease, so that uh is used by IBM internally. Um and while, you know, it's not, it's not as well known, I'm pretty proud of it because it really does help with the focus that the world that IBM has on sustainability and reuse and um and making sure that, you know, we're treating the planet fairly here, so that that's a small but powerful piece of our business well, >>You're quite broader than leasing mainframes in the 80s, >>that's for sure. >>Talking more about give, you can double click on that sort of hybrid cloud and obviously machine intelligence is a big piece of those digital transformation. So, so how specifically are you, are you helping clients really take advantage of things like hybrid cloud? >>So yeah, so um what we have typically had been doing and I can give you a couple different examples if you will, you know, for larger clients. What we tend to be doing is helping them like I said, accelerate their business. So um, you know, they're looking to modernize their applications but they still have a big infrastructure in place and so they'll run into uh you know, budget constraints and and you know, cash is still be careful to managed. So for them we are much more typically focused on, you know, if you will project based financing that allows those cash flows to line up with the savings. Again, those are tend to be bigger projects that often go to boards that return benefit is very important. Ah a little bit different value proposition for more mid market customers. So, you know, as I was kind of just looking recently, we have a couple of different customers like form engineering um or or Novi still there to smaller uh compared to some of the other customers we use uh they are again much more focused on how do I, how do I conserve and best use my cash immediately? But they want to get this, they want to get this transformation going. So you know we provide flexible payment plans to them so they can go at the rate and pace that they need to, they can align up those cash deals with their budgets for their business cycles etcetera. So again, where smaller customers where timing of the cash flow in their business cycle is very important. We provide that benefit as well. >>You know, I wonder if I could ask you. So you remember of course the early days of public cloud, one of the first tail winds for public cloud was the pen was not the pandemic, the for the financial crisis of 2007. And a lot of CFO said, Okay let's shift to uh to an apex model. And now you can always provide financial solutions to customers. But it seems like today when I talk to clients, it's it's much more integrated, it's not just the public cloud, you can do that for on premises and again you always could do that. But it seems like there's much more simpatico uh in the way in which you provide that that that solution is that >>fair? Absolutely. And this might be a little to finance geeky, I don't know. But if you go back, well if you go back to the financial crisis and all that and at that time um a lot of people were looking to financing for you call that ah please. But you know if if I was talking about off balance sheet transactions right? Um and and you know between regulation etcetera etcetera, that that off balance sheet thing. First of all, people are seeing through it that much more clearly. But second, you know the the uh financial disclosure say you kind of have to show that stuff so that that if you will, window dressing benefit has gone away. So now which is great for me, we really get to talk about what's the real benefit, what is the, you know, what is the real benefit of? You know, you want to make sure that you have known timed expenditures. You know that if your business grows that your your expenses can grow evenly with those with that business growth, you don't have to take big chunky things and so you know uh financing under the covers of an integrated solution and IBM has a lot of those integrated solutions allows businesses to have that, you know, known timing known quantities. Most of the benefits that people were looking for from that affects cloud model. Um without, you know, some of the problems that you have, when you try to have to go straight to a public cloud for very, you know, big sensitive businesses, confidential confidential data etcetera. >>Thanks for that. So, okay, we're basically out of time. But I wonder if you could give us the bumper sticker and key takeaways, maybe you could summarize for our audience. >>Yeah. For those that noah global financing or dealing with IBM, my view would be in the past we might have been a little more, you know, out there with our own with our own banner etcetera. In the future. I think that you should expect to see us very well integrated into anything you're doing. I think our value proper is clear and compelling and and and will be included uh in these hybrid con transformations to the benefit of our clients. So that's that's our objective and we're well on our way there. >>Great. Anywhere, anywhere I'm gonna go for more, more familiar, obviously IBM dot com. You got some resources there. But there is >>there any Absolutely dot com? There's there's a thank you. Just probably a slash financing. But yeah, there's >>were >>loaded with information of people. >>Excellent brian thanks so much for coming to the cube. Really great to have you today. >>I appreciate the time. >>My pleasure. Thank you for watching everybody's day. Volonte for the Cuban. Our coverage of IBM think 2021, the virtual edition right back.

[Music] from the cube studios in Palo Alto in Boston it's the cube covering the IBM think brought to you by IBM welcome back to the cubes coverage of IBM think 2020 the digital version of IBM think Bill Smith is here he's the general manager of IBM Global Financing bill thanks for coming on thank you very much for having me up I'm looking forward to it yeah me too so you know I remember the days of the the glory days of IBM you know leasing I used to run the leasing program for a couple of years at IDC and it was just it was an awesome time but things have changed a lot I mean iBM has really transformed its financing army what do we need to know about today's IBM Global Financing well some things are still saying but as you said a lot is different we constantly are celebrating our 40th anniversary this year a big part of our business is now software and services financing a lot of project man Singh we still do a lot of hardware business but it's a much much smaller portion of our thirty billion dollar asset base so it's a great business it was a great business back then when you were involved in it the very profitable and and interesting business today as it was then as I said big difference though a lot of software and services yeah well I've of course I would have mentioned that most if not all mainframes are still leased but now you've expanded it to many many more areas what can you tell us about you know some of the financial metrics you know what's the profile of the business look like yeah sure it's a it's a big business it looks a lot like a bank and we're around 30 billion in asset we do business and you know 40 plus countries around the world 26% return on equity most of the portfolio's very high percentage of that portfolio is investment rate so a couple other key metrics is we we actually issue our own debt we became an SCC registrant a couple years ago we have a you know many debt holders we only have one owner and one equity owner and that's IBM it's a very good business but 2% of IBM's revenue but about 10% of IBM's from yeah well so now this is an important aspect that I want to join to it when people you know look at the IBM balance sheet they'll you know go out or whatever Yahoo Finance and say oh my gosh look at all this debt must be you know I know of course the redhead acquisition is part of that but you're carrying a lot of the debt as part of the financing operation but people need to understand it's a very profitable and very high quality debt and if we could just address that one of the big benefits to becoming an SCC registrant is the amount of transparency that we were able to provide the investors so unlike other captive financing companies they just get rolled in to different units or parts of the books you know we actually report in the segment reporting every quarter we certify just like they you know public company would we're still a wholly owned subsidiary but the level of transparency is really great for the investors which is why you know debt holders were able to Willington by our paper it's still a very client based business we do very specialized structures we only do business and NIT as I told the board many times I'd be on board many times we don't do planes trains and automobiles we only do we only do I see and and really you know 99 percent of our businesses is IBM only so you talked about branching into software and services I'm interested in how the the client base has has transformed as a result of that sure you know there's a lot of digital transformations going on there's still a lot of ERP implementations around the world very large project so we we described it as project financing so if client will come to us and say bill we'd like to match the benefit of this very large GBS or services engagement that the IBM team is leading we like to match the benefit when we have the cash outlay so we'll put a structure together that will delay the payment for when those benefits begin to come online for the enterprise and then match payment with when benefits are actually received it's proven to be a very very effective financing instrument for us but highly effective economic instruments for the clients also gives if I'm you know contracting with IBM services you've got a major incentive for the services organization to deliver value as soon as possible and that aligns everybody doesn't it it absolutely does you know we have a lot of business partners where they'll do similar structures as well so other integrators you know if the redhead acquisition and and clients moving to a hybrid cloud model sometimes there's a migration that will take place between the traditional legacy systems and when they move that cloud well that bubble of been we take Dera so will will finance that migration effort for the client and again to match their cash outlays with when they receive the benefit that I've left from that cloud migration in the day there were tons of leasing companies who would take the risk and predict the residual values and then they'd take the paper and and and then it was just an awesome business and of course the government provided some incentives to do that with the investment tax credit what about things like refurbished equipment is that's still something that you do today or is that a thing of the mainframe pass that's great yeah that's a great question you know it's a it's still a really important and a sustainable business for us we we take equipment back that comes off of a lease or sometimes alone but typically a lease and we will refurbish that or reman factor that equipment and then put it back into market oftentimes it goes into our services organization for them to use with their clients the global technology services typically you know we will we will matram a fact or a remarket about 29,000 IT devices a week 16,000 tons of idea quipment around the in a year around the world so these remanufacturing refurbishing centers so it's a even though the hardware business has come down in its percentage of IBM's business compared to software and services it's still a very very big business as you can see by the the size of the number of equipment and the tonnage what about some of the initiatives that are so you mentioned you know the digital transformation a lot going on with cloud machine intelligence I mean those big projects you know some of them are still multi-year you know seven weeks people say oh there's no more multi-year projects but digital transformations are multi-year projects even though you might take them in chunks but I'm going to capitalize those can I finance them as well what role does does IBM finance play in that you absolutely can and and that is a big big part of our business today though the the client will they look I've got a very large digital transformation project going to take place in four countries we are looking for an opportunity to match those cash outlays with when those countries come online or when we begin to receive the benefits we also want you've been and some of the software that goes with this digital transformation and we also want to spin and the IT infrastructure that's required so we may put those services software and hardware on a different financial instruments but it looks like you know one total bill for the client and it and its global it's a global footprint so we're able to handle the different currencies around the world and and again most importantly match those cash outlays with when the benefits are received so bill you know as long as I've been in this business the IT investments from a CFOs perspective have always been viewed as a higher risk granted higher reward but but you know the the CFOs would say okay you're gonna have to have a little higher IRR for this one because you know the business moves so fast technology changes so quickly how are you seeing the CIO - CFO conversation evolve what's your advice to see iPods in terms of how they talk to two CFO's that's another really good question so I was just on with actually new client this morning one was the F of the other one was a treasurer and they were asking my opinion about this financial instrument and and and getting some advice actually the conversation went look it's not really cost the debt issue the cost of money is always part of the economic decision but oftentimes those clients use financing instrument as a way to manage the asset manage the asset throughout the life the project they also want to focus on the delivery the quality of the delivery I think that takes place during these very very large project financing engagements so the CFO specifically said look I really like business case it's quite clear when we're gonna receive these benefit what I'd like to know Bill is how do you view the risk of the implementation and you know we were able to share with them the risk work that we do with with GBS team our level of confidence that it will be done on time and on budget and the skill level of the of the partner team that's been assigned so it actually has allowed us to have a different conversation with different group or senior level at the account CFO Treasury sometimes the controller you play an important role in de-risking the the business case and as well I mean I would imagine right now in there you know these on certain times that you know IBM Global Financing can provide liquidity to businesses who need it that you you know are confident you know are stable business but might need some help you know getting through this pandemic we can and as you said the what makes us a little different is you know we make credit decisions on what we call arm's length credit visions you know for a standalone albeit at the financing company so we're very very focused on maintaining the right investment grade of the portfolio we're going to make really really good prudent risk decisions you know that being said we have some fabulous IBM clients that have been clients for a long time we work very closely with them understanding their financial structures what's what's important to them and they're very transparent with us about you know with financial challenges they have so we'll continue to provide that liquidity we are going to be very prudent but we'll certainly help those really good clients well last question it's kind of where do you see this going what's your kind of vision for IBM global global finance and give us a little glimpse of the future sure you know I think you'll see us continue to migrate in the direction of the IBM company moves the IBM company is aggressively moving towards a hybrid cloud model we'll continue to provide those migration services will continue to do you know some short-term financing a part of the business we didn't talk about was the commercial financing we provide short-term working capital through IBM 6000 isness partners so to help them with their free cash flow running their businesses you know that's a pretty big business for us we'll do about you know 14 billion or so in financing to that commercial financing business so I'll see that continue as well and then finally I'm sure you'll see us continue to grow the software and services financing as well and we'll stay with the very very high anything rate for whatever is left of IBM's Hardware portfolio point you made about the partner financing is huge like you said it helps them bridge their free cash flow it makes IBM a more attractive partner for through those resellers and partners it does and we've been in that business for a very very long time oftentimes we are one of the you know largest predators for those partners so the liquidity that we provide Danville allow them to run their businesses day to day with that short term working capital is something that we're very committed to you over the long term for IBM product and services so IBM Global Financing a very important and strategic part of IBM's business a differentiator a very few companies actually can provide that type of service to their clients and so bill really appreciate you coming to the Kuban and sharing that with with our audience great to have you back yeah very much Brad you've been a real pleasure - our pleasure as well thank you for watching everybody this is Dave Volante for the cube our continuous coverage of IBM think 2020 we'll be right back right after this short break you're watching the cube [Music] you

(upbeat music) >> Announcer: From London, England, it's theCUBE. Covering Coupa Inspire'19 EMEA. Brought to you by Coupa. (gentle music) >> Hey, welcome to theCUBE. Lisa Martin, on the ground in London, at Coupa Inspire'19. Very pleased to welcome to theCUBE for the first time, we have Dean Henry, the EVP of Business Financing and Supplier Management from American Express. Dean, welcome to theCUBE. >> Thank you, happy to be here. >> So let's talk about payments. Those of us in our day lives as consumers, the B2C transactions, they're so easy these days, right? You can transact from your phone, from your watch. We're doing everything. We're paying bills, we're buying things. Yet in the B2B space, business payments haven't had as rapid as innovation, as we've seen on the consumer side. Talk to me a little bit about the business-to-business payments industry from AMEX's perspective, before we get in to what you guys are doing with Coupa. >> Yeah well, first comment on the innovation you're absolutely right. The innovation that's happening in retail payments, hasn't made it's way to B2B payments. I think that's mostly a function of a consumer having the ease to try something new. Download an app, and change the way that they transact a bit at a store. Or, a bit with whomever they're paying. Whereas, a big business has a lot of processes that drive their business spend. And the way that they manage it, and systems. As we're here talking with Coupa today, the processes that they automate, that they bring, are critical to making payments happen. Because of that, there's just barriers to entry, that make B2B payments harder to mirror the speed, that you see in the retail side. That said, there's a lot of exciting things happening. B2B payments is a $127 trillion market globally. It's a big profit pool that a lot of players are innovating in. And when you look into the landscape and you consider who's playing out there. There's the traditional big banks, that have been sort of the stalwarts of global payments. There's obviously a large and growing fintech community, with new companies everyday that are in the media, offering new capabilities to clients. And then there's players like American Express. And I think we're actually uniquely positioned in that landscape, with not too many exactly like us. And when you look at the big banks and some of the challenges that they have. When I talk to our customers about fees, and processes that take awhile. Or money that moves with relative uncertainty, in terms of, how much is actually going to show up in the beneficiary's account, based on lifting fees, as money moves between banks. And then you look at the fintech community. That's new innovative solutions, but you're not sure that they're always going to be around, after the next funding cycle. I think we're trying to play in the middle. Where we're a great alternative to the fintech community. We're a global platform for payments. We're a global platform for lending. So we can really do all the things that a fintech can do. All the things that a bank can do, in many instances. And do that with the brand, and the certainty, that is AMEX. So we're excited about the space. And we're investing a lot of time, and energy. And partnering where we need to, in order to make sure our customers can transact where they want us to help them facilitate commerce. >> Right, that point of enabling a customer to transact where they want. What influences are you, is American Express, seeing and being able to infuse into your partnerships, from the consumer side? From that consumer who buys something with a click, or a swipe on Amazon, and wants to be able to do something similar, in their business day job. Tell me about the influence that American Express is seeing. And what that position that you just described, is allowing you guys to say, all right this is the direction that we're going to go in. Because we know we need to meet you, Mr. Customer, where you are. >> Right, well look I think part of it is demographics to be perfectly honest with you. Look at Gen Y, and Gen Z. They're more of the decision makers in today's management. They will be even more in tomorrow's management. And so they, to your point, have that expectation that their business life shouldn't be that much more complex, than their personal life. So, what we're trying to do is find the partners that have the best user experience. And make sure our solutions work seamlessly there. That's step one, that's what we're doing here with Coupa. Step two, is we're also trying to make sure that our capabilities on Amex, a digital real estate works just as easily as a our retail side of our business. And we're doing that with the unifying principles of American Express, which is the trust, and the service, and the brand that we offer to our clients. But then, also the merchant rewards. So there's a rich history of American Express providing a differentiated value proposition, with the credit card rewards that exist. And we take that capability into our business relationships, and make sure that it's a value add to those customers that want it. >> So let's talk about what American Express is doing with Coupa. What was just announced with Coupa Pay? >> So yeah, Coupa Pay, I was impressed by the stats that Rob put up there. They're growing quickly, and we want to be part of it. We're candidly following the requests of our clients who want American Express, as a payment option inside Coupa Pay. We offer a tremendous value prop inside of Coupa Pay. The data that flows with a payment, the data that we're able to collect, that differentiates us from our competition. Helps our clients reconcile their payments, eliminate the paper, realize the efficiencies that Coupa's clients are excited about. And so, we're there simply enabling American Express to be a payment option. And my hope, and I think Coupa's hope, is that that's step one of a partnership. And we'll be able to do more together, to serve our collective clients. >> So this is enabling American Express virtual cards to be available as a payment option, within Coupa Pay? >> Dean: Yes. >> And what is a virtual card? >> So a virtual card is a virtual credit card number. It can be a one-time use, or multi-use. >> Okay. >> Our clients use it for several different reasons. Buyers of goods use a virtual card, in order to make the payment of a supplier easier. To get more data, along with the transaction, so that they can reconcile a payment to a purchase order, and to associated invoices. The suppliers get benefit as well. In that, they too get enhanced data to reconcile a payment, that they receive on their end. There's also working capital benefit. In that, if a buyer chooses to pay early an invoice, we can extend financing, and pay the supplier earlier. So that they have more working capital to operate their business. So it's a real balanced value prop, where both parties are realizing value. >> Is this going to enable a buyer to have benefits, like increased security, with the way the virtual card works? >> Increase security, in so far as a virtual card is encrypted. The fact that American Express stands behind all of our card payments, with our brand and our promise. That differentiates from a traditional bank payment. You know ACH, and other low value clearings, that don't have those guarantees along with it. So that is a big differentiator. But I think candidly, the biggest benefit our clients see is the enhanced data, and the working capital. I think that's where we're trying to enrich both sides of the transaction. Give more data to enable the automation that's happening in the industry. And extend credit, so that businesses can operate more efficiently. And buy the things they need to buy. And hire the people they need to hire. >> Is this also something that will give suppliers, and buyers, more visibility? You talk about enhanced data. Will they now have more visibility over buyers, like different supplier options? Or suppliers, with different ways that they can get paid? >> So certainly, enhanced visibility on when a supplier is getting paid. And relative to the invoice date. And what we're trying to do is work with Coupa, and work with our partners around, well how do we enhance the data so that as Coupa talks about the community of suppliers, that their buyers utilize. How can we be part of that? How do we support the buyers in making decisions? The suppliers in utilizing American Express as a source to be a verified business, that has gone through all the legal checks, that are required in commerce. And bring both of those capabilities, to a transaction on the Coupa network. >> One of the stats that Rob mentioned this morning. I love stats, I really geek out over them, I don't know why. He said there's five million plus suppliers on the Coupa platform. Is that an advantage, that American Express sees, to help extend the footprint of your virtual cards? >> Absolutely, what I'm candidly more excited about is the millions, and millions, of suppliers that are on the American Express network. And that's an asset that I see personally, as something that we can work with Coupa, and other partners, to bring the businesses that are already verified. That are on our network, that we personally talk to every year. And bring those verified profiles to the commerce networks, like Coupa, so that it's easier to transact on Coupa, if you have an American Express card. >> Got it, and then last question for you is if we look at this partnership, what was announced today, this is launching in the UK and Australia first. And then, you'll roll it out more globally. Can you tell me a little bit about why those two regions? When that's going to be available for customers to use? >> So the honest answer is we wanted to be fast to market, quick out to our customer base. The UK and Australia, are two very important geographies for us. So we're launching first in those places, by the end of the year. And then, looking at rolling out in the US in early 2020. And then, from there expanding alongside Coupa globally. >> Tell me, as we're sitting here in London. Some of the interesting things going on, it's a lot of geopolitical challenges. Everybody knows about Brexit, and the election coming up, on the 12th of December. Tell me a little more about the UK market for American Express. What were some of the market dynamics that Amex said, hey there's an opportunity here for, I'll use a word that Coupa uses, acceleration, like accelerated time to market. Give me a little more about that. >> Yeah I mean candidly, like the geopolitics haven't really played into our launch. But the UK has been a strong market for Amex, for a very, very long time. Brighton, where we have a very big presence with the local football team in Brighton. That's just a metaphor for the broader extension, and client base, and employee presence that we have here. And so we wanted to make a big partnership announcement, in an important place. And the UK felt like the right market to do it in. >> Excellent, well Dean thank you for joining me on theCUBE this afternoon. Sharing what's new, with Amex and Coupa. We appreciate your time. >> Thank you so much. I'm really happy to be here. >> Oh excellent. For Dean Henry, I'm Lisa Martin. You're watching theCUBE, from Coupa Inspire London '19. Thanks for watching. (gentle music)

>>live from Las Vegas. It's the Cube covering Splunk dot com. 19. Brought to You by spunk >>Hey, welcome back, everyone. We're live here in Las Vegas for Splunk dot com. I'm John Ferrier with Q two great guests. Tim would Bury, director of state and local affairs for Splunk and Charlie Crocker, CEO Zone Haven. Very innovative. Start up doing some incredible things with Splunk Ventures Financing Summerlee Financing around Really check for good guys. Welcome. Thank you, Charlie. First, explain what you guys are doing real quick because I think this is a great example of what I've been seeing now for two years now. But now, in the past year, renaissance of entrepreneurial activity around mission driven tech for good, where entrepreneurs are using the cloud and sass models and platforms like Splunk to stand up Mission Value Commission >>value. I like the term. Explain what you're doing. So simply put, we're building in evacuation planning and support to. So right now, there are more stronger fires happening. Over the last five years, we've had more than half of California's most destructive wildfires happened just in the last five years. So it's it's mission critical that we figure this out. Now the's fires air. So big goal is really just to get people out of harm's way. And that's a difficult job to figure out at three in the morning with a map on the hood of a pickup truck. So we're building Zillah ways for fire. There's no ways for five ways has got public safety >>people no ways. But the thing is, is that yesterday I was watching on TV and Pacific Palisades, California air drop of water on the canyon, right before house, and I see the people running right. You like running for their lives. There was a serious business. Exactly. You guys are trying to provide system >>we're trying to do. What we've built are a set of zones, the ability for the Fire Department, law enforcement and, oh yes, to work on customizing hyper local evacuation plans, hyperlocal down to the neighborhood level and then we're scaling that statewide. So how do you make sure that this fire department on these three law enforcement groups are coordinated before and how do they have the conversation with community before the event happens? If we can save five minutes at the time, the event happens, we're going to save lives. >>So this is really about making efficiency around the first responders on the scene from leveraging data which maps or their >>maps, data dynamic data, telemetry, data where the fire's gonna go simulations for how the fire could potentially grow. Who needs to get out of harm's way first. What's that gonna do to the traffic and Road Network? Talk >>about the original story. Then we get to this plug involvement, the origination stories you're sitting around. You're talking to friends in the business. >>So we have colleagues and friends that are in the business and many of them, you know, from the Silicon Valley these guys are innovative leaders in in fire on. They've got a lot of really good ideas on how to make their jobs better. >>They >>don't have a tech team, they don't have a tech arms. So we literally said, Look, we'll come in and we'll make work what your vision is, and that started to expand on. Now we started to move from these smaller jurisdictions. Too much larger >>jurisdictions. Data is driving the future. That's a tagline I'm reading. I've seen the new branding by the way, the new brains very strong, by the way. Love it, Thank you. So this is a good example of data driven value constituency fire professionals. That's all they think about is how to make people save put, get in harm's way to try to solve the fires. They don't have tech teams. You don't have a data center they don't have, like with boot up a consulting. To come into a waterfall of a meeting by that sign is just, Yeah, you can't just do that. They can't stand up. How did you guys get involved in this? It's data driven, obviously. What's the story? >>Way, Say, dated everything. We really mean it. It's really you know, it's a personal story for me. I am on the government affairs team here. It's flowing, so I manage relationships with governors and mayors, and these are the issues that they care about right When the city's burning down, the mayor cares about that. The governor, This is you know, one of the governor in California's major initiatives is trying to find solutions on wildfires. I met Charlie, my hometown. Orinda, California Aren't Fire Chief in that town was one of sort of the outside advisers working with Charlie on this idea. And we're and I met him at a house party where the fire chief was telling me to trim my trees back and shrubs back. And then I was at a conference three days later that same fire chief, Dave Liniger. I was on a panel with folks from a super computer lab and NASA and M i t was like, you know, my fire chiefs, Still the smartest guy in that panel. I gotta meet this guy. A few weeks later, we were literally in the field doing these concepts with sensors and data. Super savvy folks. Some of the other folks from Cal Fire there. Dr. Cox was with us today. Here on. You know, we've just been collaborating the whole time and seeing you know that that Splunk and really put some fire power power behind these guys and we see like, Look, they've got the trust of these customers and we need to make sure this idea happens. It's a great idea, and it's gonna save lives. >>It's crazy way did a test burn where we run a small burn on a day where we're very confident it won't grow. Put the sensors out right next to a school in Arena. It was his kid's school. >>Yeah, I have a kindergartner that goes to that school, so >>it's slightly personal for you. I could >>be I could be said that this is just me protecting my own. But it is something that I think will save lives around the world. >>First of all, this, there is huge human safety issues on both sides. The ire safety put in harm's way. Those professionals go out all day long, putting their lives at risk to save human, the other human beings. And so that's critical. But if you look at California, this other impact cost impact rolling blackouts because they can't instrument the lines properly just because of the red red flag warnings off wind. I mean, I could be disrupted businesses, disruptive safety. So so PG and e's not doing us any favors either. Sound so easy. Just fix it. >>It sounds easy, but I think with be Jeannie, it's interesting way do need to prevent wildfires and really any way that we can. But like you said, if we could bring more data to the problem maybe we can have the blackouts be smaller. You know, they don't have to be a CZ big. >>There's certainly no lack of motivation to find solutions to this issue. There are lives on the line. There's billions of dollars on the line that these types of solutions own haven a part of part of what is going to fix it. But there are many very large stake holders that need these solutions very quickly. >>Well, you know the doers out there making it happen of the people in the front lines on the people they're trying to protect our cities, our citizens on this sounds like a great example of tech for good, where you guys are doing an entrepreneurial efforts with people who need it. There's a business, miles, not free non profit. You're gonna get paid. It's a business model behind. >>There is a business bottle behind it, and I think the value proposition is only beginning to be understood, right? There were so many missions in so many different ways. Wildfires are massive. You can come at him from satellite, come at him from on the ground. We're working with the people on the ground who need to get people out of harm's way. We're focusing on making their jobs easier, so they're safer and they get people out >>more quickly. You guys in the tech business, we always talking. We go. These events were re platforming our business. A digital transformation. You know all the buzz, right? Right. This is actually an acute example of what I would call re platforming life because you're taking a really life example. Fire California Fire forest There, out in the trees trimming thing is all real life. This isn't like, you know, some digital website. >>We certainly I mean, I've been in the data business for more more time than I can remember, and we've got the tools, tools, like Splunk tools. Like Amazon Web service is we've got the data. There's satellites all over. We've got smart people in machine learning way. Need to start applying that to do good, right? It exists. We do not need to go invent new technology right now in order to solve this problem, >>Charlie, really inspired by your position and your your posture. I want you to spend more time talking about that feature because you're an entrepreneur. You're not just detect for good social justice Warrior, You're an experienced data entrepreneur, applying it to a social good project. It's not like I'm gonna change the world, you actually doing it. There's a path for other entrepreneurs to make money to do good things fast. Talk about the journey because with cloud computing, it's not like a 10 year horizon. There's a path for immediate benefit. I >>mean the pat. So I mean in terms of creating a profitable venture. We're a young company way feel like we have a good, good direction way feel like there is a market for this way. Also feel like there's public private partnerships Here is well, I think that we can take the same solutions that we have here and apply them to campuses. You could apply it to, you know, a biotech campus, a university campus. You could apply it to a military base, right? There's insurance could be involved in this because insurance risk people are losing insurance in their homes as well. So you know, there's a lot of different angles that we can take for this exact same. Say >>that what's the expression dated to everything. Yet this is an example of taking data on applying it to some use case. >>A very specific cool evacuation neighborhood evacuation and really building the community fabric so that people take care of each other and can get out together. Where are the vulnerable populations in that zone? Who's gonna go respond to those If if the fire department can't come in, right, How are we gonna get those people out? >>I love the vision. You guys were also for putting some cash in their spunk. Ventures. Congratulations. Talk about the product. Where you guys at using Splunk. You putting data sensors out there, You leveraging existing data. Both take us through some of the nuts and bolts of what's going on the >>price. So part of it is building out some data sets. So there are some data sets that don't exist. But the government and the counties and the private sector have built out a huge corpus of data around where the buildings are, where the people are, where the cell phones are, where the traffic is. So we're able to leverage that information as we have it today. Technology. We're using the Amazon stack. It's easy for us to spin up databases. It's easy for us to build out and expand, as as we grow online with Splunk were able to have a place for all this real time data toe land. And for us to be able to build a P I's to pull it out very >>simply having a conversation with Teresa Carlson, who runs Amazon Web sites. Public sector variety of these things of projects are popping up. Check for good. That's for profit. It helps people and the whole idea of time to value with cloud and flunks. Platform of leveraging diverse data making Data Realtor whether it's real time, time, serious data or using a fabric surge or accelerated processing capabilities is that you can get the value quicker. So if you got an idea for you to wait two years of just e whether it was it a hit or not, you can illiterate now. So this idea of the start of agile startup is now being applied to these public sadly like things. So it's everything >>you spot on, and you know the unique element of Splunk with some of these data sources way don't necessarily know which ones are gonna be the right ones. We're talking about satellite data, sensor data. Some of this on. Part of it is we're building an outdoor smoke alarm, right? No one's ever done that before. So, you know, with court nature of Splunk technology being able to easily, you know, try to see if that is the right data source is critical, giving people the man with two go try to make this happen. >>You guys are a great example of zone haven, Charlie, You and your team of what I call a reconfiguration of the value creation of startups. You don't need to have full stack develop. You got half the stack and Amazon domain expertise in the inertial properties flipped around from being software on this intellectual mode to domain specific intellectual property. You took the idea of firefighters and you're implementing their idea into your domain expertise using scale and data to create a viable, busy >>other thing. I want to throw in there, though, and this is something that people often forget a big part of our investments going to be in user experience. This thing needs to be usable by the masses. It cannot be a complicated solution. >>You X is the new software data is the new code, but anyone can start a company if they have an innovative idea. You don't have to have a unique algorithm that could be a use case to solve a problem. >>If you have a very Calgary them, you can put it on Splunk Platform or Amazons platform and scale it. >>This is going to change, I think, the economic landscape of what I call tech for good now. But it's entrepreneurship redefined. You guys are great working example of that. Congratulations on the vision. Thank you to you and your team. Thanks for coming on the Q. Thanks for sharing. It's great to be here. It's a great example of what's going on with data for everything. Of course, this acute were cute for everything. We go to all the events of smart people and get the data and share that with you here in Las Vegas for dot com. 10 years of conference our seventh year, I'm John Ferrier. We'll be back with more coverage after this short break

>> Male Narrator: Live from San Jose, California, in the heart of Silicon Valley, it's the Cube, covering QuickBooks Connect 2016. Now here are your hosts Jeff Frick and John Walls. >> And welcome back inside the San Jose Convention Center here at the Cube, along with Jeff Frick, I'm John Walls, appreciate you joining us here as we continue our coverage of QuickBooks Connect 2016, live here on SiliconANGLE TV. This is the flagship broadcast where we extract the signal from the noise. And Jeff, we're on the home stretch here through the second day, I could stay here for a few more days. Great guests, great lineups, great keynotes, and a lot of energy here on the floor I like. >> Lot of energy, I love these kinds of shows because it's really about helping people be successful and we're talking about real things, and again we keep coming back to products and solutions in technology but for most small businesses it's about cash. It's about cash flow. >> Being successful, Rania Succar, is now joining us, she's a QuickBooks Financing and Director there at QuickBooks, and we appreciate your time here, Rania. >> Great. >> So tell us about just the overarching mission, right, cause as Jeff said, helping people, giving them access to capital, badly needed, small businesses, it's a critical need, and what QuickBooks does on that, with that, on the financing platform. >> Well you guys have seen it here for the last few days. The QuickBooks team is absolutely focused on helping small businesses survive and thrive. Everyone here's trying to crack that, and you just said it, cash is one of the biggest pain points that small businesses face. Whenever we talk to small businesses, the first thing they tell us is the thing that keeps them up at night is cash flow, and we also know one of the biggest reasons that small businesses fail is they can't get access to cash flow, and to cash, and so the team a couple years back said we've got to crack this in order to help more small businesses survive past the five year mark and be able to put their dreams into action. So with that in mind, we took a look at financing and for small businesses, it's a fairly broken process, so we're working to reinvent small business lending. It's broken for a couple of reasons, one is, if you have ten businesses that go into a bank to apply for a loan, only three get approved, and it takes over 30 hours of work for a small business to do that application to a bank, so it's right for innovating and improving the experience for small businesses, so what we do, is we're hyper focused on making the experience better in three ways, first, we're trying to drive up the approval rate, and we do that with the incredible clarity and we do that with the incredible clarity with which we can understand the small business based on the data that we have. We understand the small business ecosystem better than anyone, and we understand the full picture of a small business' credit worthiness, and financial health better than everyone, anyone. We can give them access to-- we can help them get credit for all the future invoices that they have coming in, we understand the strength of their customer base, you put that together, we can drive approval rates up. The other thing we're focused on is the time it takes to apply. You need to put together tax returns, and interim financial reports if it's the middle of the year, and bank statements, it's very frustrating. We have most of that information in the Intuit space, and our vision is rather than even applying it's just available for you in QuickBooks when you need it, and the third thing, so approval rates, the time it takes, the third thing we're very focused on is the guidance. Small businesses need advice, most of them didn't get into running their own small business because they knew anything about finances, they had a dream and they wanted to put it into place, and so we're very focused on taking the insights we have about a small business to help them get lending that's right for them with confidence that they're getting the right financing for their business. So we can help them predict when they're going to need financing, and we can connect them to an accountant because we know over a million of our small businesses are connected to accountants. So that's what we do, and this week as you heard, we just announced we crossed the half a billion dollar mark in financing in small businesses. >> Now, say that again. >> Half a billion dollars. >> Half a billion dollars of financing. >> Congratulations. >> We're incredibly proud, we're incredibly proud. >> Let me ask you a couple details, so my kids are going, they're applying for college right now, so the CommonApp-- >> So, Jeff will need somewhere shy of half a million of that money. (Rania laughs) >> Do you have like a CommonApp inside QuickBooks which is a defined kind of definition that then gets shared with the lenders that want to participate in the market, or do you have like a defined QuickBooks FICO score, if you will, based on these other parameters that you have that then get shared with the lenders, how do you kind of, you've got all this data, it's my data, but I'm allowing you to use in such a way to help me get this loan in this market place. How does the actual mechanics work. >> I love that, we're a platform, almost like an Amazon in a sense, where you go to Amazon, you have one thing that you want to get and you get access to multiple different providers, so we're a platform. Right now, the way that it works, there is a CommonApp, but the amazing thing is you don't have to fill it out because we have all the information inside QuickBooks so we pre-fill it for you and ask you just for a couple of things but we do all the work and then we figure out which of our lending partners based on what you need, we've got about a dozen, are best suited for your needs, and then we send the information to the lenders with your permission and then you get all your offers right there, and the really neat thing about what we do is we compare the offers apples to apples, this is pretty incredible, we're super focused on transparency, this is a big part of our value proposition, we always disclose the APR of the loan, we always show the loan cost apples to apples so that you know exactly what you're getting, we show you things like what are the fees, what are the pre-payment penalties, so it's super clear, super transparent, and you know what you're getting. >> It's like the comparison shopping table. >> Exactly. >> You lay it all out and I can make my decisions. >> Exactly. >> And then how long does it usually take on a relatively smooth process given the fact you're already pre-populating the data, it goes out, what does it usually take? >> A lot of our lenders fund within the same day. >> Jeff: Within the same day? >> So you literally with a lot of our lenders, if everything goes right, you can apply within minutes and get funding in your bank account the same business day. >> The money goes through the same system as well. (Jeff chuckles) >> There are lenders, and we have a portfolio of offerings, so we'll work with, we have an SBA lender, we've got work in capital lenders, if you're going through the SBA process it's a lot faster through our process than it would be if you applied through a traditional bank, but it still could take a couple of months in that case, so we make that very clear, when you choose the offering that you want, if you're in need for financing right away, it can happen very quickly, if you're willing to wait a couple more months, in the worst case, in the case of an SBA loan, on average, it's less than a week. >> Well it seems like you have so many pieces in place to make it much more convenient and much more reliable and I guess much more predictable for a small business, what about approval rates then, what, you said three out of ten? >> That's the current. >> On average, is that the current, is that your average? >> Ours is better than that, it's not quite there, you know, we have a really high aspiration on that, where we'd like to be able to get, you know, we'd like to get it closer to 60 or 70 percent over time, the approval rate, so we're still moving in that direction, we've got a great team, we've got tons of innovation and R&D happening right now back in Mountain View, we've got a ton of data scientists that are combing through this data and improving the approval rates all the time, so that's an area where we're innovating and really pushing for our small businesses. >> And so, nice announcement this week, well better than nice, great announcement this week, but you're always looking, as you said, for the next best thing. >> Rania: Yep. >> And so what have you heard from your client base that says okay, we've addressed this, now this is where we need to pivot, this is where we need to go, like what's the next big hurdle or next big challenge that you think you need to handle? >> It's innovating on those three areas I told you, and on each of those three we've made quite a lot of work and quite a lot of headway in the last few years, but there's so much more room, and so like I've said we have this team of phenomenal data scientists working to find those areas of advantage for small businesses where we can help them get approved more often. We've got the team that's trying to really make it to a point where you're in QuickBooks and you can see your financing offer before you even apply. We want to get rid of the application altogether and just service the best offer for you, and then all the prediction for when you're going to need financing and that cash flow prediction, looping in the accountant so the accountant can immediately see all the options you were given and they can talk through them with you. >> And your clients can find out right away, the customers, if they did not get approved. >> Right. >> Where's the trouble area, where did the red light come on? >> That's right. >> Because of the figures you're able to consult with them and help them maybe shore up their bottom line? >> We don't do enough of that today, it's absolutely in our road map, so that's a huge opportunity because we have a relationship with small businesses, it's not like a transaction where you go to a website and you apply for a loan, we're in it for the long term to help small businesses grow and so you can imagine, and this is where we're headed, when you start, you know, you get your first financing, it could be a credit card, and then a year or two later we see that you're financials have improved and we consult you on the next offering and all the way you get better terms because you've been with us for a while and we can help make sure you're getting better financing deals over time. >> It's a really interesting situation, because, you know, hopefully over time, really it becomes, we always talk about kind of looking back, and then predictive and then prescriptive, so in theory, as you're moving down your path, as you're growing your business, it should actually flag you, right, hey, by the way you've got a big event, seasonalities coming up, oh we just noticed you just locked in a big purchase order, somebody's late to pay et cetera, it might be a good time to get actually ahead of the curve before you even know that this event is coming to go ahead and make even up to in making the offer. >> Absolutely, you know, you're getting ready to, you know, for the holidays and have you thought about making sure you've got enough financing to buy as much inventory as you want this year so you can take advantage of the seasonal trends we're seeing. Or we're seeing a lot of retailers, you know, really heavying up on inventory, have you thought about doing that as apart of your strategy, it looks like it could be a good year, so there's so much opportunity there, we can pair every small business owner with a line of credit so that they can manage payroll at any given time and never have to worry about the cash flow ups and downs that come. >> Right, and then I would imagine too, within like those different offers, not only apples to apples across the same type of loan, but maybe you should consider, you know, a factoring on your receivables, versus a capital loan that's capitalized against some equipment or something, cause there's also options within the types of financing that you may want to do. >> So on that we've done quite bit of work. We have lenders in our portfolio that do invoice financing. We've got lenders in our portfolio, Amex working capital terms, that do vendor bill payment through, you know, paying all of your bills that are coming up, we've got as I said SBA loans that will help with long term expansion, we've got that, and we're just continuing to innovate on that too. >> And from the lender point of you, you said you have about a dozen, you're bringing in more, you know, for the opportunity, cause a lot of them probably already have existing relationships with many of these clients, how do they see kind of the opportunity to interface for those clients in this different way through QuickBooks as an intermediary? >> Oh, they love it, because it's very hard for these lenders to go out and acquire new customers, often times they don't have a relationship with these existing customers and they have to go out and do the hard work to acquire customers whereas they're in the QuickBooks ecosystem and, you know, customers really love the opportunity to work with these lenders because we can provide the right advice to them paired with the loan offering, so it works out very well. >> It should be cheaper for them to actually provide those too, cause again you're taking a lot of the headache out. So, before we went live, you talked about some of the numbers, I just want to go through some of the numbers, so you shared the big number 500 million. >> Yep. >> But in terms of kind of an average loan size that you see, in a lifetime value of the loans to some of the customers, I was wondering if you could share some of those statistics. >> Sure, so we see two very different needs for financing from our customer base, there's the work and capital loans, and there's the expansion capital loans, and our customers typically are split between the need for both and at any given time, a business is actually looking for both. They need to smooth over the work and capital and then the expansion capital as well, but our average loan size is about 35,000 dollars today, and it ranges from as little as 2,500 dollars to just smooth a very small cashflow bump that you have, all the way up to 250-500 thousand dollars to do some of the all the way up to 250-500 thousand dollars to do some of the bigger expansions that small businesses are looking to do, and it's really wonderful to be able to help small businesses on both sides of the spectrum because if you're a small business owner, seasonality is really a major pain point. Often times, they'll have most of their business concentrated in the summer months, or potentially the summer months and the winter months, but not the spring and the fall, and so you need, you still have tons of bills, you have employees you need to cover in those off months, and having access to financing where you can get it fairly quickly cause you don't know when those bumps are going to hit, is incredibly valuable. On the flip side, the expansion side, every business owners dream is to expand and it's been amazing to be here over the past few days and hear these stories, you know, Alli Webb on stage yesterday, the founder of Drybar, talking about how she went from one location to 66 in 5 years, and so it's very hard to go into a bank branch in 5 years, and so it's very hard to go into a bank branch and convince them of your grand idea to expand. >> Jeff: Especially if they don't have hair. >> Especially if they don't have hair, she had a hard time... (everyone laughs) >> Her husband and her brother are business partners and they're both bald. >> Yeah, they're sitting with them, they don't have hair either, so. >> So for that reason, it's hard to convince people, and so it's wonderful to be able to help the expansion side of things too. >> Hopefully this has been, if nothing else, a great opportunity for Frick Inc. to find out about the small business college fund. >> Jeff: It's already gone through. >> That quick. >> John: Right, so we'll find out in less than 24 hours. The kids are going to Stanford. >> Alright. >> Or you're going to work at the community college for a bit. Rania we appreciate the time. >> Sure, it was great. >> Very much, thank you for being here. >> Thank you. >> And congratulations on the Amex announcement, and so many other great things you have in the pipeline now to make small business dreams come true. >> Wonderful, thank you very much, it was great to chat with you. >> Thank you very much Rania. Back with more here on the Cube from San Jose in just a moment. (hip tech music)

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