(techy music) >> Live from Toronto, Canada, it's theCUBE covering Blockchain Futurist Conference 2018, brought to you by theCUBE. (techy music) >> Hello, everyone, and welcome back. This is the live CUBE coverage here in Toronto, Ontario here in Canada for the Untraceable Blockchain Futurist Conference. This is day two of wall-to-wall CUBE coverage. We've got great presentations going on, live content here on theCUBE as well as in the sessions, great networking, but more important all the thought leaders in the industry around the world are coming together to try to set the standards and set up a great future for cryptocurrency and blockchain in general. Our next two guests are very special guests for theCUBE and we're excited to have them on, the Honorable Wayne Caines, Minister of National Security for the government of Bermuda, and Kevin Richards, concierge on the Fintech business development manager, part of the Bermuda Business Development Agency. Thank you guys for coming on, really appreciate the time. >> Thanks very much. >> Thank you for having us. >> Why this is so important is that we heard your presentation onstage, for the folks, they can catch it online when they film it and record it, but the Bermuda opportunity has really emerged as a shining light around the world, specifically in the United States. In California, where I live, Silicon Valley, you guys are now having great progress in hosting companies and being crypto-friendly. Take a minute to explain what's happening, what's the current situation, why Bermuda, why now, what's developing? >> This has all happened over the last eight months. We were looking in November of 2017 to go in the space. In January we went to the World Economic Forum in Davos in Switzerland. When we went to Davos in Switzerland something very interesting happened. People kept coming up to us, I was like the Hound of the Baskerville, or the Pied Piper if you please, and so, so many people were coming up to us finding out more information about Bermuda. We realized that our plan that we thought we could phase in over 18 months, that it had to be accelerated. So, whilst we were at the World Economic Forum in Davos we said to people, "Listen, if you want to change the world, "if you want to help Bermuda to grow, if you're serious," this is a Thursday, "Meet us in Bermuda on the Monday morning." On the Monday morning there are 14 different people in the room. We sat in the room, we talked about what we wanted the world to be, how could Bermuda be in place, what are the needs in this industry, and by the Wednesday we had a complete and total framework, and so we split up into industries. Number one was ICOs, we wanted to look at how to regulate the ICO market. Number two, we wanted to look at digital asset exchanges or cryptocurrencies or how do we regulate security tokens and utility tokens and what do exchanges look like, how do we do exchanges in Bermuda, and then we wanted to talk about education and setting up incubators. And so, come fast forward to July, August, we have an ICO bill in place that allows us to look at setting up ICOs in Bermuda. We wanted to focus on the legal and the regulatory framework, so this is a nascent space. A number of people are concerned about the dark actors, and so we wanted to set up a jurisdiction that traded on our international reputation. Now, remember for the last 60 years reinsurance, finance, captives, hedge funds, people in the financial services market have been coming to Bermuda because that's what we do well. We were trading on the reputation of our country, and so we couldn't do anything to jeopardize that. And so, when we put in place the ICO legislation we had consultants from all over the world, people that were bastions and beasts in industry, in the ICO industry and in the crypto world came to Bermuda and helped us to develop the legislation around setting up an ICO. So, we passed the ICO legislation. The next phase was regulating cryptocurrencies, regulating digital assets, and we set up a piece of legislation called the Digital Asset Business Act, and that just regulates the digital asset space exchanges, and the last piece we wanted to do was a banking piece, and this is the last and we believe the most significant piece. We were talking to people and they were not able to open up bank accounts and they were not able to do, so we said, "Listen, "the Bermuda banking environment is very strong." Our banking partners were like, "Listen, "we love what you guys are doing, "but based on our corresponding banking relationships "we don't want to do anything to jeopardize that space," but how could we tell people to come to Bermuda, set up your company, and they can't open bank accounts? And so, we looked at, we just recently passed creating a new banking license that allows people to set up their business in Bermuda and set up banking relationships and set up bank accounts. That simply has to receive the governor's Royal Assent. As you know, Bermuda's still a British pan-territory, and financial matters have to get the okay of the Queen, and so that is in the final stages, but we're excited, we're seeing an influx, excuse me, a deluge of people coming to Bermuda to set up their companies in Bermuda. >> So, the first two pieces are in place, you have the legislation... >> Mm-hm. >> Mm-hm. >> You have the crypto piece, and now the banking's not yet, almost approved, right? >> It's there, it simply has to get the final sign-off, and we believe that it should take place within the next two weeks. So, by the time this goes to air and people see it we believe that piece will be in place. >> So, this is great news, so the historical perspective is you guys had a good reputation, you have things going on, now you added on a new piece not to compromise your existing relationships and build it on. What have you guys learned in the process, what did you discover, was it easy, was it hard, what are some of the learnings? >> What we've learnt is that KYC, know your customers, and the AML, anti-money laundering, and terrorist financing pieces, those are the critical pieces. People are looking in this space now for regulatory certainty, so when you're talking about people that are in the space that are doing ICOs of $500 million or exchanges that are becoming unicorns, a billion dollar entity in three months, they want a jurisdiction that has regulatory certainty. Not only do they want a jurisdiction with regulatory certainty, they want to open up the kimono. What has this country done in the past, what do they have to trade on? We're saying you can go to a number of countries in the world, but look at our reputation, what we're trading on, and so we wanted to create a space with regulatory certainty, and so we have a regulatory body in Bermuda called the Bermuda Monetary Authority, and they are an independent regulator that they penned the Digital Asset Business Act, and so the opportunity simply for people around the world saying, "Listen, we want to do an ICO, "we want to set up an exchange. "Where's a country that we can go to that has a solid reputation? Hold on, how many countries have law surrounding"-- >> Yeah. >> "The Digital Asset Business Act, how many ICO countries have laws. Guess what, Bermuda becomes a standout jurisdiction in that regard. >> Having a regulation signaling is really important, stability or comfort is one, but the one concern that we hear from entrepreneurs, including, you know, ourselves when we look at the market is service providers. You want to have enough service providers around the table so when I come in and domicile, say, in Bermuda you want to have the banking relationships, you want to have the fiduciary-- >> Yes. >> You want to have service providers, law firms and other people. >> Yes. >> How are you guys talking about that, is that already in place? How does that fit into the overall roadmap for your vision? >> I don't want to beat a horse (laughs) or beat a drum too much, that is what we do as a country. So, we have set up, whether it's a group of law firms and the Bermuda, excuse me, the Bermuda Monetary Authority, the Bermuda that's the register of companies that sets up the companies. We have Kevin, and Kevin will tell you about it, he leads our concierge team. So, it's one throat to choke, one person that needs, so when you come to really understand that the ease of business, a county that's business-friendly with a small country and with a small government it's about ease of reference. Kevin, tell us a little about the concierge team. >> It's like the Delaware of the glove, right? >> Absolutely. >> Come in, domicile, go and tell us how it works. >> I'll give you a little bit of background on what we do on the concierge side. So, one thing that we identified is that we want to make sure that we've got a structure and a very clearly defined roadmap for companies to follow so that process from when they first connect with the BDA in Bermuda to when they're incorporated and set up and moved to Bermuda to start running their business is a seamless process that has very clearly identifiable road marks of different criteria to get through. So, what I do as a concierge manager is I will identify who that company needs to connect with when they're on the ground in Bermuda, get those meetings set up for when they come down so that they have a very clearly mapped out day for their trip to Bermuda. So, they meet with the regulator, they meet with the government leaders, they meet with the folks who've put together legislation that, obviously you mentioned the service providers, so identifying who's the right law firm, corporate service provider, advisory firm on the ground in Bermuda, compliance company, and then making sure that depending on what that company wants to achieve out of their operation in Bermuda they've got an opportunity to connect with those partners on their first trip so that they can put that road map together for-- >> So, making it easy... >> Making it very easy to set up in Bermuda. >> So, walk me through, I want to come down, I want to do business-- >> Yeah. >> Like what I hear, what do I do? >> So, you send me an email and you say, "Listen, Wayne, we're looking at "doing an ICO launch in Bermuda. "I would like to meet with the regulator. "Can you put a couple law firms in place," in an email. I zip that over to Kevin or you go on our Fintech.bm website-- >> Yeah, I was going to say... >> Fintech.bm website, and Kevin literally organizes a meeting. So, when you come to Bermuda for your meeting you have a boardroom and all the key players will be in the boardroom. >> Got it. >> If you need somebody to pick you up at the airport, if you need a hotel, whatever you need from soup to nuts our team actually makes that available to you, so you're not running around trying to find different people to meet, everyone's there in the room. >> And the beauty of Bermuda is that, you know, the city of Hamilton's two square kilometers, so your ability to get a lot done in one day is, I think, second to nowhere else on the planet, and working with the BDA concierge team you're, you know, we connect with the client before they come down and make sure we identify what their needs are. >> The number one question I have to ask, and this is probably the most important for everyone, is do they have to wear Bermuda shorts? (laughs) >> When you come you tell us your size, you tell us what size and what color you want and we'll make sure, so the... I tell this story about the Bermuda shorts. The Bermuda shorts, Bermuda's always had to adapt and overcome. Bermuda, we have something called the Bermuda sloop and it's a sailing rig, and so we... The closest port to Bermuda is Cape Hatteras in North Carolina and we wanted to cut down the time of their voyage, so we created a sailing rig called the Bermuda rig or the Bermuda sloop. Over the years that has become the number one adopted rig on sailing boats. We've always had to adapt and become innovative. The Bermuda shorts were a way to adapt and to get through our very hot climate, and so if you look at just keep that in mind, the innovation of the Bermuda sloop and the Bermuda shorts. Now, this Fintech evolution is another step in that innovation and a way that we take what's going on in the world and adapt it to make it palatable for everyone. >> What's the brand promise for you guys when you look at when entrepreneurs out there and other major institutions, especially in the United States, again, Silicon Valley's one of the hottest issues around-- >> Yes. >> Startups for expansion, right now people are stalled, they don't know what to do, they hear Malta, they hear other things going on. What's the promise that you guys are making to the law firms and the people, entrepreneurs out there trying to establish and grow? >> The business proposition is this, you want a jurisdiction that is trading on years of solid regulation, a country and a government that understands business, how to be efficacious in business. When you come to Bermuda you are trading on a country that this is what we've done for a living. So, you don't have to worry about ethical government, is your money going to be safe. We have strong banking relationships, strong law firms, top tier law firms in Bermuda, but more importantly, we have legislation that is in place that allow you to have a secure environment with a clear regulatory framework. >> What should people look for as potentially might be gimmicks for other countries to promote that, you know, being the Delaware for the globe and domiciling, and what are some of the requirements? I mean, some have you've got to live there, you know, what are some of the things that are false promises that you hear from other potential areas that you guys see and don't have to require and put the pressure on someone? >> When you hear the people say, "We can turn your company around in the next day." That we don't require significant KYC and AML. Red flags immediately go up with the global regulatory bodies. We want when a person comes to Bermuda to know that we have set what we believe is called the Bermuda Standard. When you come to Bermuda you're going to have to jump through some legal and regulatory hoops. You can see regulation, the ICO regulation and the Digital Asset Business Act on BermudaLaws.bm. BermudaLaws.bm, and you can go through the legislation clause by clause to see if this meets your needs, how it will affect your business. It sets up clearly what the requirements are to be in Bermuda. >> What's the feedback from business, because you know, when you hear about certain things, that's why Delaware's so easy, easy to set up, source price all know how to do in a corporation, let's say in the United States-- >> We don't have the SEC handicaps that they have in America, going from jurisdiction to jurisdiction. You're dealing with a colony that allows you to be in a domicile that all of the key players finances... We have a number of the key elements that are Bermuda. We're creating a biosphere that allows a person to be in a key space, and this is, you have first move as advantage in Bermuda. We have a number of things that we're working on, like the Estonia model of e-residency, which we will call EID, that creates a space that you are in Bermuda in a space that is, it's protected, it's governed. We believe that when companies set up in Bermuda they are getting the most secure, the strongest business reputation that a country could have. >> The other thing I would add, I'll just say, you know, quality, certainty, and community is what that brand represents. So, you know, you've got that historical quality of what Bermuda brings as a business jurisdiction, you have the certainty of the regulation and that pathway to setting your company up and incorporating in Bermuda, and then the community piece is something that we've been working on to make sure that any of the players that are coming to Bermuda and connecting with Bermuda and setting up there, they feel like they're really integrated into that whole community in Bermuda, whether it be from the government side, the private sector side. You can see it with the companies that have set up that are here today, you know, they really have embraced that Bermuda culture, the Bermuda shorts, and what we're really trying to do as a jurisdiction in the tech space. >> What can I expect if I domicile in Bermuda from a company perspective, what do I have to forecast? What's the budget, what do I got to do, what's my expectation? Allocate resources, what's going to be reporting, can you just give us some color commentary? >> So, with reference, it depends what you're trying to do, and so there will be different requirements for the ICO legislation. For the ICO legislation a key piece of the document actually is the whitepaper. Within the whitepaper you will settle what your scope of business is, what do you want to do, what you know, everything, everything that you require will be settled in your whitepaper. After the whitepaper is approved and if it is indeed successful, you go to the Bermuda Monetary Authority and they will outline what they require of you, and very shortly thereafter you will able to set up and do business in Bermuda. With reference to the digital asset exchanges, the Digital Asset Business Act, such a clear guideline, so you're going to need to have a key man in Bermuda, a key woman in Bermuda. >> Yeah. >> You're going to need to have a place of presence in Bermuda, so there are normal requirements-- >> There's levels of requirements based upon the scope. >> Absolutely. >> So, if you run an exchange it has to be like ghosting there. >> Yeah, yeah, you need boots on the ground. >> And that's why the AML and the KYC piece is so important. >> Yeah. Well, I'm super excited, I think this is a great progress and this has been a big uncertainty, you know, what does this signal. People have, you know, cognitive dissonance around some-- >> Yes. >> Of the decisions they're making, and I've seen entrepreneurs flip flop between Liechtenstein, Malta, Caymans. >> Right. >> You know, so this is a real concern and you guys want to be that place. >> Not only, we will say this, Bermuda is open for business, but remember, when you see the requirements that we have some companies won't meet the standard. We're not going to alter the standard to accommodate a business that might not be what we believe is best for Bermuda, and we believe that once people see the standard, the Bermuda Standard, it'll cascade down and we believe that high tides raises all boats. >> Yeah. >> We have a global standard, and if a company meets it we will be happy for them to set up and do business in Bermuda. >> Well, I got to say, it's looking certainly that leaders like Grant Fondo in Silicon Valley and others have heard good things. >> Yeah. >> How's been the reaction for some of the folks on the East Coast, in New York and around the United States and around the world? What has been some of the commentary, what's been the anecdotal feedback that you've heard? >> We're meeting three and four companies every day of the week. Our runway is full of Fintech companies coming to Bermuda, from... We have insurtech companies that are coming in Bermuda, people are coming to Bermuda for think tanks, to set up incubators and to do exploratory meetings, and so we're seeing a huge interest in Bermuda the likes have not been seen in the last 20 years in Bermuda. >> Well, it's been a pleasure chatting with you and thanks for sharing the update and congratulations. We'll keep in touch, we're following your progress from California, we'll follow up again. The Honorable Wayne Caines, the Minister of National Security of the government of Bermuda, and Kevin Richards, concierge taking care of business, making it easy for people. >> Oh, yeah, oh, yeah. >> We'll see, I'm going to come down, give me the demo. >> We're open for business and we're looking forward to seeing everybody. (laughs) >> Thank you for the opportunity. >> Thank you very much. >> Thank you. >> Major developments happening in the blockchain, crypto space. We're starting to see formation clarity around, standards around traditional structures but not so traditional. It's not your grandfather's traditional model. This is what's great about blockchain and crypto. CUBE coverage here, I'm John Furrier, thanks for watching, stay with us. More day two coverage after this short break. (techy music)

>> Announcer: Live from Las Vegas. It's theCUBE. Covering InterConnect 2017. Brought to you by IBM. >> You're a startup, growing. >> Jamie Alexander: Absolutely. >> You're working with big banks. This is not easy. >> Jamie Alexander: It is not easy. >> Normally they don't work with startups at all. >> Jamie Alexander: It's not easy at all. >> And Thintek is exploding as a very big growth area. Cloud enables this. Take us through some of the key points in your journey. As CTO, you've nailed some big wins with some big, established financial institutions, how'd you pull it off, what's the formula? >> Yeah, actually you could come and see my talk on Wednesday. I actually do that in detail. But I could give you a quick summary. So there's really, all along the way from the initial pre-sales to the pitch sessions with the customers, to the pilots, there are kind of learnings all along the way of the process and I think the number one thing is white glove service. So, typically, from a scalability perspective, startups are being trained to make it self-service, API, there's a developer portal, people can go in-- >> John: Move fast and break stuff. >> But actually, especially for the first set of customers, the white glove service is absolutely essential and really establishing the relationships at the ground level, so not just on the business side, that's a given, but also with the technical folks, the people at the banks that are doing the integrations, they can kill your projects. And so, really, giving them a bit of a taste of our culture I think, actually, really excites them. >> The white glove service, though, if I hear this correctly, it's not just being kind and holding their hand, there's some technical table stakes. >> Absolutely. >> What are those table stakes? 'Cause that seems to be the enterprise readiness matrix. >> Yeah, that's a great question. So I think the key is making tools that are very simple for developers to use, have developers love using your product, because, ultimately, it's a technical integration, and so one of the things that we did is we created an SDK both for iOS and Android and it's not just service connectivity, but it's also the full user experience around receipt capture. And what that did is it precluded the need for the banks to go and build all the screens and all the workflows. We could come in and say right away, here, we have it for you, you can customize it, configure it to make it look like your banking application to add your brand elements to it. But, ultimately, it allowed them, in a very short period of time, to bring on that new feature. The end user has no idea about Sensibill, there might be a little logo at the bottom of the receipt that says it's powered by Sensibill but other than that, it very much fits in with the existing banking application. And that's really important because receipts aren't their space, we want them to, right out of the gate, have a receipt capture application that's intuitive for end users. And this allows us to put it in their hand and just make it work for them. So that's really a big part of the success for them. >> And you've overcome that startup fear. >> Jamie: Absolutely. How have you done that? >> So I think the advantage for me is did spend my early career with IBM. So I spent about the first 13 years, >> Dave: So you were trained by IBM. So you kind of know. (laughs) >> And so I was both in software groups or working on e-commerce implementations but sort of the middle part after that, was in global services where I got to work with people in enterprise but across various sectors. And so that gave me they confidence and really allows me to think in the same way that enterprise folks think. Because we're not a startup that's selling, that has a platform where people are sharing pictures of sneakers, I mean this is serious business, and not to belittle other-- >> And their brand. Your customer's brand is on the line here. >> Absolutely, and so it really impacts everything we do. Who we hire, the culture we try to build, how we present ourselves to our customers. I mean it's across the board. Many considerations. But I think also, like me personally, I've always had that entrepreneurial spirit. So I've always been hacking things together on the side, and, actually, around 2010 when I left IBM, I had a previous startup, so this is number two for me. In fact, at IBM, I tried to, actually, do something intrapreneurial. But for me, actually, B to B, especially Business to Enterprise is for me really the sweet spot in terms of my skills and it's hard, so I like that. I like a hard problem and I would prefer that there's more barriers and it shows in the interest from our investors as well. You want a business with moats around it, and certainly financial institutions like banks, can take two years to close a deal. It's a really long sales cycle. >> John: So you're up for the challenge. >> Absolutely. >> So other than your past with IBM, what's the other IBM connection? You're running this on Bluemix, and IBM Cloud? >> Yeah, so we're running the solution on Bluemix. So we chose IBM for a number of reasons. One was their global footprints, in terms of their data centers. Our customers have certain SLAs they expect us to uphold. They require that we have disaster recovery in place. And so SoftLayer was very early, in terms of, bringing their data centers into Canada. So they recognize the opportunity there. And so we were both in Toronto and Montreal data centers. On top of that, as well, we've been part of the IBM Global Entrepreneurship Program. That's given us some mentoring around how to scale our business. Gave us some financial incentives as well. On top of that, there are other relationships that we've explored with the services business at IBM. so could, theoretically, IBM be a preferred vendor for, or integrator for our technology, and so there's a number of fronts that we're working with IBM and I think also, partly, because my former relationship, I was an employee at IBM. >> Dave: In Canada or in the U.S.? >> In Canada. So even our CEO for example, she was also at IBM. So bringing the best talents that I can find. People that want a change in their career and move from a large enterprise to a small company, we look for those people. >> And you were in the software labs up there, and then in the services group you got the financial services domain expertise and brought the software and FS together, wallah. >> Yeah and I, certainly, would not have predicted all the excitement around Thintek when I started. I'm really pleased that I, magically, threw horse shoes in luck and ended up in the right place at the right time. Even from three years ago-- >> When you tackle hard problems, usually, you end up in a good spot. >> Absolutely, yeah. >> So the hard question I want to ask you, this is a tough question, so be ready. Canadians or The Maple Leafs? >> (laughs) I'd have to say the Maple Leafs, to be honest, I'm from Toronto so. (laughing) >> Unless the Maple Leafs lose and then the Canadians over the Bruins, obviously. >> Hey, if there's a Canadian team, I'll be rooting for them. >> I love the hockey in Canada, being from the Boston area. Alright now, I want to ask you something more sentimental about the culture. You mentioned culture which you were talking about, your company culture. What's the cultural shift that you're seeing in the market place? Because we're talking about you're a start up that has cracked the code on a very hard problem with banks getting a customer. So kudos and props for that. But also, there's a whole dev ops movement that's going, now, to data. Where we heard some of the IBM execs pointing out the counter culture that's developing. The younger generation, they don't want things the old way. They're doing things much different. Can you comment about what your observations are around this cultural shift? >> Yeah, for sure. I think we've spent a bit too long, in general, paying lip service to the word innovation and I think, finally, it's, really, coming to fruition. Like real innovation not innovation just for the sake of marketing but, really, being able to innovate. Because a sub set of the millennials that are coming up, they really have, the culture of innovation has, really, been infused into their entire upbringing. And then they're, really, showing that in the work place. You see, over the last say, five, six years, the rise of hack days and these kind of things. People that are also interested in solving problems that don't just have commercial outcomes to them. What you find is, that if you can align people's passions and interests and have them understand that if you go after this thing, your career will be set. That's some of the things we try to do with our more junior resources. Is let them know that if there's something that they're interested in, a problem they want to tackle. It's aligned with where we're going from corporate objectives. Go after that because you will get what you want at Sensibill. We want those kind of people that don't just pay lip service to innovation but, really, see something and are self starting and can go after things on their own. I think there's, also, a big aspect of social awareness. There's people on our team and rightly so that are concerned about ethical use of data. So we're, at Sensibill, drafting up a policy just so, internally, we know that we can agree, collectively, on how we intend too use our data. It's, certainly, not malicious purposes. We're not selling individual user data. Now the banks do have access, the data collected through their systems is theirs. But, ultimately, in terms of how we plan to monetize the insights which is the next, really, interesting thing and things that I'm working on in 2017, really making sure it's done in an ethical way. >> That's your next moon shot is to, really, crack the code on the governance and the management of the data? >> But I think to get the right people, you also have to have to consider the social implications of using the data. People have to feel good about the work they do. There can be a lot of sensitivity around the type of data that we collect. >> Well Jamie, congratulations on the financing of your start up. Jamie Alexander, who's the co-founder and CTO of Sensibill. Check em out. If you're a big bank, not many of them, it's mostly potential customers. Congratulations on winning the big deal as a start up, that's great news. >> Thanks so much. Thanks for coming on the CUBE and sharing your start up story. I'm John Furrier with Dave Vellante. Keep watching it here. Stay with us for more coverage from Las Vegas after this short break. (lively music)

>> Voiceover: Live from Orlando, Florida. It's The Cube. Covering Sapphire Now. Headlining sponsored by SAP Hana Cloud, the leader in platform-as-a-service. With support from Console Inc., the Cloud Internet company. Now, here's your host John Furrier. >> Hey, welcome back, everyone. We are here live inside The Cube and we are at Sapphire Now, the SiliconeAngle's flagship program. We go out to the events, instruct (indistinct) Want to give a shout out to our sponsors. SAP Hana Cloud Platform, Console Inc., Virtustream, and EMC and Capgemini. Thanks for your support. We really appreciate it and it allows us to get these great events and provide all this great coverage. Over 35 video interviews already up on Youtube, more coming today. Our next guest is Michael Hoch who's a senior vice president of global system immigration at Virtustream. Now an EMC company sold for 1.2 billion dollars. Originally start out in the SAP ecosystem, created so much value over a billion dollars and then exit to sold to EMC. Welcome to The Cube. >> Thank you very much for having me. I'm glad to be here. >> I really love the Virtustream story because to me, we've been watching the progression of Virtustream from the beginning and it really to me, shows the value of the possibility of what's going on in this ecosystem. You sold for 1.2 billion dollars and that's now come, it's out there, it's established. Cat's floating, whatnot. (Michael laughs) But it really shows that you guys started out with an SAP and then pivoted or navigated out to a business model with the Cloud. Probably a lot of value. This is a lesson for the ecosystem because this is an example where SAP didn't have functionality. What you guys were doing, really was an operating model that was underserved. Very underserved. >> Share the story of how it relates to today's ecosystem. >> Sure. So when Virtustream was founded, Cloud was sort of an anathema for the enterprise. Right? That was the time where AWS was starting to shoot off. Microsoft was just dipping their toes in the water. And what Rodney Rogers and Kevin Reed saw is the opportunity was if you could put SAP and large enterprise mission critical applications on the Cloud, that's something that could have tremendous value in the future. At the time, everybody was skeptical. Security concerns. Availability concerns. Management concerns. >> "It'll never work." >> It'll never work. >> They said that about Amazon web services too. >> A few years earlier, that would never work and now they're what? 10 billion or something. So they focused on that market segment for two reasons. One, there was a huge value if it could work and two, they knew SAP. They came from a joint which they sold eventually to Capgemini. They knew SAP and system integration. White Glove Service was critical for enterprise applications to run in the Cloud. So the company was built with a White Glove Service that we started. As well as our technology, the extreme platform, that was really designed to host IO intensive stateful apps. From there, we grew, we did well, we plowed our way through the VC era. The reason why--- >> Wow, big word. Plow. (laughs) It was a sog. >> Yeah, I had been there for over five years and there were some days but in the end, where we got to over 200 SAP production customers, EMC very interested because of the technology, as well as the White Glove Service. And that's where we, about two years ago, started opening up to SI partners. Now, we were proving that this could work. We were winning customers against them and giving in a small way, the types of hand holding that they do on day to day basis. So we started partnering with some SIs to show that they could run it as well. >> Explain that. Take a minute to explain >> Sure. the relationship that Virtustream, now EMC Virtustream, has with SIs and how they engage with you and the value that you provide. >> Sure. Sure. So, we work with SIs in a couple of different ways. So, SIs are known for high touch, high management application services generally. When it came to where's it going to be hosted? Some SIs are asset light and they say, "Well, here's your respects, go buy data centers, go buy your own servers, whatever. Once you got the hardware provisioned, we'll come in and do the application work." Other SIs built their own data centers. Capgemini runs their own data centers and they had their application management work. So you had asset heavy, asset light. In the Cloud world, we were able to come in easily to those asset light situations and now through our software can help those asset heavy companies to build a full Cloud model to support it. In an asset light model, we would provide up to the IAS, maybe OS management and the SI would handle basis, data baseboard, all of the work that they're very good at. We did what we were really good at. >> Yeah, and this a big trend. We put this up yesterday on The Cube. This asset light and if you can take a minute to describe that is the new normal for operations management on the Cloud. Because you don't want to have heavy assets, you want to be more elastic, more agile if you will. >> Agile and responsive and it ties very well into the current trend of enterprises saying, "How much of my data center do I need to keep?". We're in a hybrid world. We're going to be in a hybrid world for the next several years. So there's going to be a large portion of on premise and a large portion of off premise. How do you build a hybrid environment that's scalable where you can pay for what use in the Cloud while still making use of whatever asset you have? So, the SIs look a lot like IT. >> So if everything's asset light or no asset, say we're using the Uber for example, it backs me out to do self-driving cars. (Michael laughs) As reported today in Pittsburgh. You need a data center somewhere. I mean someone's got to have a data center. So there's no diminishing return, there's no race to zero on this asset light. Someone needs to carry the assets. >> Someone needs to carry the assets and that's where Virtustream stepped in. Five or six years ago, someone's going to need to own this but we're going to need to own it at a higher degree of efficiency and still the scalability and security. >> So, this is the issue, right? >> Yeah. >> If you're going to use data driven, you need to have a data center. But here's where I want to get your thoughts on and this ties to the global channel, A-K-A the big system integrators who are doing a lot of stuff. They're have to be nimble to customer needs so they don't have and tell me if I've got this right? They don't have the luxury to provision up a data center at the scale that need in order to get table stakes and start doing business? And that it's easier to go to say Virtustream and other Clouds possibly to get the critical mass of resource to start doing business and being agile do up in software. Did I get that right? >> Well, if we're talking about the systems integrators in particular, they have some solution already. Most of the large ones, already either have their own data centers or co-location relationships but they're very manage hosting focused. What they're trying to get to is an agile responsive way to deliver what they've already been delivering. And that's where the partnership with Capgemini, for example. Our extreme software and their data centers, they're able to use our IAS as burst capabilities or to reach regions that they can't today. That really gets them into a position of looking like a Cloud provider, even though, they're owning their own data centers. They can use us, our IAS, for regions that they're not in or to extend. But they're able to get to that very responsive manner. What Virtustream was built from from the ground up. What we've been doing for the last six and half years. They're adding to their coasting capabilities. You'll see that >> You're accelerating there with other SIs as well. >> with pre-existing stuff. Giving them the ability to go out and do some of the agile dull. >> Don't lose your current customer, put 'em in a modern world. 'Cause this is another interesting trend. You've got ISVs looking like service providers. All the ISVs want to move to a Cloud enabled something. Maybe not full sass but something and then you've got service providers that need to look more like ISVs, software solution driven. >> So everything's flipping around? So the vector's are reversing on all aspects. >> On all aspects. But either way you look at it, they still want to have a consumption based infrastructure behind it. So whether you're asset heavy where you want to convert your data center to do that or you're asset light and you need to access one like Virtustream, it's really the way that it's already tipping in the industry, it's just going to continue over the next three years. >> What's the biggest challenge for developers out there? And the ecosystem partners that you're working with? I know you mentioned your story about Virtustream, schlogging through the VC and being agile, and that's the ups and downs of entrepreneurship. When we've started companies together. I've done companies. It's the same way, highs and lows. But that culture's moving their world (laughs) It's still turbulent to these guys. It is an up and down for these guys. It's a slog at some level because they got to be agile and that's very startup-like. >> To start up, they have to be agile and what I see, even the global SIs, you're talking about billion dollar companies, multi billion dollar companies. They're getting pressured by their customers to say I want an all in one solution and I want to pay for what I use. And their business models aren't necessarily ready for that so they're having to really rethink of they're delivering, how they're innovating, and what they're bringing to their customers. Because if they don't do it that customer is going to go to somebody who does. >> Yeah, I mean the enterprise has to become more entrepreneurial. That is the only way in my opinion that you're going to see the innovation surge and that's not necessarily be entrepreneur, just be entrepreneurial. >> Right (laughs) >> It's a mindset. >> Mindset. >> And you can learn that. You got to get tough skin. >> Tough skin and taking advantage of changing business conditions, ramping down when it's a good >> Iterating. slow seizing. Iterating. This why everybody comes to Cloud. Agility being number one. They say we want to respond to changing business conditions. You're business also has to respond, it can't just be your IT. >> Alright, the age of Cloud, Michael thanks so much. Give you the final word. What's on your plans for this year? What do you got going on? What's the big highlight for Virtustream? >> Sure. So, we've been doing SAP for six years or so, we're branching out into other enterprise applications. You'll be seeing us expand our catalog. We've always been a heterogeneous Cloud but you'll see a more aggressive move into that. And you'll see the scale. We're going to be opening up new locations globally. Thanks to our parent's company EMC. >> Big, big, deep pockets. >> Big deep pockets. >> I bet to so no one gets--- >> Our customers are global. We need to get our offering out in the global market. >> Well, congratulations on the success and the acquisition and certainly being a private company. Dell Technologies, a combination of EMC and Dell, will give you a lot of room to maneuver under public scrutiny. >> I'll come back in the Fall and talk about that. (light laughter) >> Thanks so much. >> This is The Cube. Live in Orlando for SAP Sapphire. I'm John Furrier. You're watching The Cube.