>>Welcome to the cubes coverage of Dell tech world 2022. My name is Dave Volante and I'm currently in our studios outside of Boston. As we prepare to gather for the first in person Dell technologies world since 20 19, 1 of the major structural change and the technology business during the pandemic was IBM's spin out of Kendra. A world class technology services provider that lived inside of IBM. Kendra is a large business with trailing 12 month revenues north of 18 billion. It's got 90,000 employees worldwide. Kendra has long term predictable cash flows. And in my view is one of the most undervalued companies in the technology sector. As a separate company, Kendra is able to turn many of its former internal IBM roadblocks into tailwinds and ecosystem. Partnerships are one of the best examples of new opportunities that are opening up for the newly separate at company. In this next segment, we're gonna dig into a new partnership between Kendra and Dell technologies and what is the most critical priority for organizations today? Cyber resiliency and with me are two really impressive and talented guests. Chris Lovejoy is global security and resiliency practice leader at Kendra. Michelle Weston is vice president of, of global offerings for security and resiliency also at kindred ladies. Welcome to the cube. Thanks for coming on and spending some time with us. >>Thank thank you. >>Okay. Let's zoom out a little bit and start with a big picture. What would you say are, are the one or two major trends or changes even in cyber that you've seen since the pandemic, maybe Chris, you could start us off and Michelle, you can chime in. >>Sure. Happy to. And, um, you know, I think part of this actually preceded the pandemic and, um, you know, the fact is, you know, a lot of organizations have been engaging in the adoption of new technologies, you know, be it cloud AI IOT, what, what, whatever that may be. Um, and they've been introducing that technology without, um, adequate security control and during the COVID pandemic, um, when, you know, technology transformation happened for existential reasons, what we were seeing is organizations throwing at even more technology at cyclic, right, with absolutely no security control whatsoever. And in the meantime, the regulators who are, you know, watching this in, you know, horror are introducing new requirements in and around, um, what we're calling cyber resilience today. And it's all based on this concept that, you know, conventional cybersecurity assume that the adversaries could be kept out of organizations. >>Um, you could protect the organization and sort of block it, um, as rising numbers of disruptive attacks, like, you know, ransomware attacks have shown those approaches don't work. And so, um, what we're seeing is that the market is really moving toward this concept of cyber resiliency, which goes beyond cybersecurity. It assumes that the advanced a adversaries are frankly, many adversaries can overcome, um, conventional protections and that, um, they, that organization need to prepare to recover. Um, so our approach, the approach that we're taking to the market is really to help organizations in binding security plus continuity plus disaster recovery, then giving them the ability to anticipate, protect, um, with stand and recovery from any adverse condition associated with their cyber real estate. Um, and this is why we're so excited to work with Dell, uh, because they're really, uh, paving the roads for us to actually, you know, work together in solving these needs for our clients. >>Got it. That makes sense. And now Michelle, as Chris was saying, these worlds are coming together. What used to be adjacencies, oftentimes they, after thoughts, bolted on, and now you've got the work from home and, and hybrid work, not to mention, as Chris was saying, you're injecting AI and all this data, you know, this is a complicated situation for a lot of people, isn't it? >>Yeah. And it was only even more complicated during, during the pandemic as well. I think, uh, another trend that we saw was the end enterprise was outside the enterprise, right? Uh, everyone was working from home. They weren't in the data centers, their own resiliency and security protocols were already at risk because they were so manual and people intensive. And yet we know, you know, the bad actors actually took advantage of, of that right. Uh, data centers were, uh, less monitored. Um, we had all of the employees working from home. Now, the enterprise is outside of the enterprise, but you still need security and resiliency for all of those endpoints. Right. And I think that's driving a higher need, um, coming out of the PA the pandemic and even with this hybrid model, okay. We'll return to work, but not, not in the same fashion that we did prior to the pandemic. >>That's the new reality. The other thing that I would say is that those customers that had adopted cloud already and cloud enabled their business, they were able to fare, um, the best during the pandemic. They were able to sustain their businesses. Um, alternatively, and it's kind of a different lens to it. I think the pandemic actually drove new ways of working and some really creative solutions. I mean, if you look at, um, you know, food delivery services that, uh, proliferated during the pandemic, or, uh, that are now offering fitness online, um, fitness classes online, people had to think, um, intelligently and, and creatively on how they sustain their businesses. So I think all of that's coming together, but certainly this need of, as you said, not thinking of security and resiliency as an afterthought, but as a forethought planning for those things efficiently and effectively, that we find customers that do that, uh, do it the best. And, uh, I think that Kendra offers a unique value pro in here because bringing both together is a journey that we started a couple of years ago that we've only accelerated with the, uh, spin of the Kendra company. >>Yeah. Interesting. So I wanted to talk about that partnership because mm-hmm, <affirmative>, you know, Dell's got this massive channel, it's got infrastructure technology expertise, uh, but Dell, you know, Dell's a product company, Kendra is a services company, so it's a really good match in that sense. Right. Uh, maybe you could talk about how the partnership came together and, you know, what are the critical aspects that folks need to be aware of? >>Yeah. I would say Dell's an excellent partner for us and they have been for a number of years. So in a lot of ways that's not new. Okay. Uh, we've been partnering in market together for quite quite some time. In fact, the solution that we'll talk about today was first put into market in 2018. And you're absolutely right. We, we come together in the best ways. They're leveraging our strengths with regard to manage services, professional services. And we are certainly looking at them as a key technology provider, um, for our portfolio, we've worked together for years. Uh, we manage backup environments based on their data protection solutions, including data domain, but what was unique. And I think we were both ahead of the market at the time, um, was the 2018 solution that we put in to market and have only enhanced and augmented it ever since it's, it's called, um, cyber volt is, is the solution from Dell technologies. >>We certainly manage that solution in market for them today. And then we have unique differentiation in our Kindra portfolio that we've integrated with that and add to, um, their cyber incident recovery features, um, Dell initially put the solution in market coming out of, um, some of the ransomware attacks that they had cyber attacks that they had. They realized there was a need to protect the large data domain install base around the world. Um, they developed some proprietary solar solution, uh, software on top of their large data domain boxes and, and any cyber incident recovery solution. You need a, a few things you need the ability to assure imutable storage, a, a copy that you can assure has not been altered so that when you initiate the recovery, you know that you've got a clean copy and you're not propagating whatever is there. Um, so the solution has that, um, it has the other component that you need, which is the ability to scan the data for anomalies, right? >>So they're scanning the backup files continuously to look for anomalies. And then lastly, you need some form of data mover, which the data domain, um, solution offers. So they came to us in 2018 and said, look, we've got this solution. We think we're ahead of the market. Uh, we were also investing in cyber incident recovery with a key asset that we acquired in market in 2015, um, that we've continued to bake cyber incident recovery features and functions into, and they said, let's marry the two. And let's have you provide all of the managed services capabilities around this for clients. Um, that is a key piece because when it comes to cyber, uh, there's always a level of confidence that customers have, right? Yes. I can recover from any adverse condition. If you ask them, can you recover from a cyber attack with a hundred percent assurance? I don't think there's a customer today that could say given how sophisticated and how much these, these attack vectors are changing, that, that they, they have that a hundred percent confidence level. So a managed service provider, a phone, a friend in the event of is a, is a unique value proposition. Um, and that's what the two companies are bringing together, uh, for customers today. >>Got it. Thank you. So, so Chris, maybe as a services company, you, you, you have to be ignite, you know, to technology, you know, the best fit, et cetera. But, but prior to the spin, we never would've heard it, something like this. And so what, maybe you could talk about the partnership from your perspective. >>Yeah, no, absolutely. And I, I do wanna, um, you know, sort of double click on this a little bit, you, and you mentioned it in your opening, you know, headwinds being wins now. And I think this is important, incredibly important. You know, what people don't realize about Kendra is that, you know, we were never able to, as the services organization, um, that was really focused on strategic outsourcing and providing other kinds of services to, uh, clients while under the IBM banner are really never able to talk about the technical depth that we had across any number of platforms, including, um, the hyperscalers. And we have thousands upon thousands of people with hyperscaler certifications. Um, we have experience with pretty much every security and resilience technology out there. Um, we have broad and early with organizations like yours, that we were never able to speak about now, you know, when it comes to a client, you know, let's be realistic. >>Everybody is engaged in some sort of it modernization program. And while, and we have to realize also that those it modernization programs, you know, oftentimes they have no destination per se. You know, we talk about them as a journey, but we, if no destination, they just keep going and going and going. And the directions change every day, depending on, you know, what the strategic, uh, requirements are from whatever C-suite, you have, you know, sitting at the table, uh, what the competitive trends are, what the market is telling you, et cetera. And so what clients are saying to us is that the value we offer is that we can untangle the mess. That is their environment. We can meet them where they are, we can get them where they wanna go. And so, you know, when it comes to a relationship with Dell, you know, we believe that, you know, particularly in the area of security, in resilience, that there is a unique proposition to be had around the services and the cross platform experience and certifications and skills that our, um, our teams have married with the technology advances that Dell has made in the, in, in the world, as well as our experience in, you know, sort of the two that has have been frankly, hidden over the past few years. >>I think we have some, uh, something unique that we can offer to the market. Particularly, as I said, in this space of security and resilience, where all of our clients are, you know, looking for some sort of solution to this, you know, gee, I can't spend enough money to protect myself. I need to make sure that if the worst happens that I can bring myself back again, that's what we can do for our clients. >>Great. Thank you, Michelle. I wanna go back to the solution for a moment. You mentioned a number of things, integrations. I got like a zillion questions here. I'm interested in what kind of integrations you talked about imutability where does, where does that occur? Is that in the cloud? Is that the, you know, Dell technology is scan for anomalies again, what is that? Is that some kind of, you know, AI magic, you got a high speed data mover. Is there an air gap involved, maybe help me fill in some of those gaps. >>Yeah. And I think you, I think you've netted out the solution. Any cyber incident recovery solution in my mind would have those three things. They have some form of imutable storage. Uh, this could be cloud object storage in the case of the Dell solution, they're actually using their retention lock feature on the large data domain devices. Right? So think of this solution as having two data domains, they both have this retention lock feature. That's the imutable storage. They're able to move data and forth between the two, uh, that's another key piece. And then finally, for any incident recovery solution, you need the ability to scan and make sure that there aren't anomalies, um, in this case, in the backup files. So they're using a, a third party to scan thatno scan those files for anomalies. And when when's detected, that kind of gives the indication that something may be there and then they can go in and triage it and, and, and clean the environment if needed. >>Um, so we certainly manage that end to end, and that is one approach. It is an on-premise approach. It uses the data domain, uh, technologies. We know that clients have a lot more than that, right? So where Kendra comes in with its cyber incident recovery solution that also integrates with Dell's cyber incident recovery solution is we support cloud, um, multiple infrastructure. We have also imutable storage that we leverage. Um, and then in terms of our anomaly scanning capabilities, in this case, we're using technology that we had originally developed in IBM research that we integrated into the software product. Um, again, this is on an acquisition we did in market five years ago, called son Nobi. It's a software product. Um, it ingests and automates all of your workflows in the, in, in the event of any failover failback, any, uh, outage, including cyber and that technology underpin a lot of what we do on the incident recovery perspective, Dells use data domain. >>We've used the software, all both solutions have all three components of the cyber incident recovery, uh, solution when they're integrated, there's real power there, right? Because now you're looking at protection, not just of the backup environ, um, but all environments, including production, you're looking at being able to scale beyond OnPrem. Um, and more importantly, you're looking at the speed to recover, right? The not needing to rehydrate the data, but to be able to recover with the RTOs and RPOs that are expected, um, of our customers on the resiliency orchestration side, the Kendra solution. Um, this is, this is push of a button fail over, fail back in the event of an outage. Um, you can recover the entire hybrid estate in the matter of minutes and what we know with respect to any outage it's costly. We know know that downtime is costly, but with respect to cyber, we know that that's more costly than a typical outage, sometimes four X, um, you don't always recover from the brand damage from the loss of customers. So being down and, and coming up as quickly as you can, with the additional data verification, data validation and assurance that you're not propagating, whatever is there is the value prop, um, that both CU, both companies are really serving. >>And where does an air gap fit in into this equation? Is that yet another layer of protection what's best practice there? >>Um, so think of the air gap is just between the data movement and the immune storage, right? You need to be able to cut connection in a way, right. That is an air gap solution. And it's based on the imutable storage that both have. >>Okay. And that would be, it could be local, I guess, but it also could be, it should be maybe remote. Yes. Mm-hmm >><affirmative> okay. Exactly. And, and the ability to manage and orchestrate that air gap is a key value prop again, of the Kendra solution. >>Okay. And so I've mentioned local or remote. I mean, obviously the trade off is recovery time, you know, uh, I guess RTO, um, but, but <laugh> and RPO. So a lot of layers is, is what I'm hearing is that's always security pros in this framework. >>Let me give you another example, the reason why this is so important. Um, most of our Dr. Processes today, they all rely on people, right? We had a large client that was impacted when we were IBM. They were impacted with pet. They had a great Dr plan. They were a customer of ours. Um, we managed that service for them. Their Dr. Plan was still people intensive. And when that attack happened, it took out the badge readers to the people that you've invested in. Can't get on site to manage the incident, can't bring up the environment. And then if you look at going back to the very beginning of our conversation, COVID being sort of, uh, another way that that happened with access and the ability to continuously monitor and have the people on site that ability was impacted. So this is where you need to invest in technology, uh, P and processes to make sure that you are as robust as you can be. And as Chris said, your ability to anticipate with stand and recover from any adverse condition, that's, that's the value prop that our global practice brings. Yeah. >>To your, to your point, the adversary is well funded and motivated. Chris, we'll give you the last word, where do, where do you wanna see this partnership go? You know, kinda what what's next? What should we look for in the coming months and in, in years? >>Yeah. I'm, you know, I think, you know, very simply, and I'm going put my CISO hat on right. For a minute, because I think it's important to speak, you know, for the customer as a customer, you know, at the end of the day, I, I think most C-suite executives do don't realize the extent to which security, continuity and disaster recovery have been separate silos. And what is shocking to our clients when they get into a ransomware event in particular is the fact that they have their, um, systems, their services, their data is locked up, their backups have been sort of implemented or have, have been, you know, sort of subverted. They call in the pros, they call in the folks that help them with the incident response. The incident responders are able to identify the ransomware strain. They're able to contain the ransomware strain, but the damage is done. >>Now, what, how do you bring the environment back? How do you that the data is good? How do you, how do you find the system configurations and load them again? In what order do you load them? What they don't realize is that security and recovery, they have to be merged together. And so what I think that we can do it, it's not just, you know, build customer demand is not just sell a solution. We can really help clients. And so my hope is that we are able to bring cyber resilience into every organization, every large enterprise out there that needs to, you know, continually service their clients and their employees. They need to stay in business that we're able to bring the solution to them in such a way that they're able to, you know, bring back their environments to serve their clients when the worst does happen. >>Great. Yes. Thank you. We're definitely seeing that data protection world and the cybersecurity world. They, they adjacencies, but they really are coming together and part of a comprehensive plan. Okay. We have to leave it there. Thanks so much folks for coming on the cube really appreciate your time and your insights. >>Thanks for having us. And >>Thank you. Thank you for watching the Cube's coverage of Dell technologies world 2022. Keep it right there. We're running all week with live coverage from the show floor. We're pumping in deep dives like this one throughout the week. So don't go away.

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante you know we've often said that the next 10 years in cloud computing won't be like the last ten cloud has firmly planted its footprint on the other side of the chasm with the momentum of the entire multi-trillion dollar tech business behind it both sellers and buyers are leaning in by adopting cloud technologies and many are building their own value layers on top of cloud in the coming years we expect innovation will continue to coalesce around the three big u.s clouds plus alibaba in apac with the ecosystem building value on top of the hardware saw tooling provided by the hyperscalers now importantly we don't see this as a race to the bottom rather our expectation is that the large public cloud players will continue to take cost out of their platforms through innovation automation and integration while other cloud providers and the ecosystem including traditional companies that buy it mine opportunities in their respective markets as matt baker of dell is fond of saying this is not a zero sum game welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll update you on our latest projections in the cloud market we'll share some new etr survey data with some surprising nuggets and drill into this the important cloud database landscape first we want to take a look at what people are talking about in cloud and what's been in the recent news with the exception of alibaba all the large cloud players have reported earnings google continues to focus on growth at the expense of its profitability google reported that it's cloud business which includes applications like google workspace grew 45 percent to five and a half billion dollars but it had an operating loss of 890 billion now since thomas curion joined google to run its cloud business google has increased head count in its cloud business from 25 000 25 000 people now it's up to 40 000 in an effort to catch up to the two leaders but playing catch up is expensive now to put this into perspective let's go back to aws's revenue in q1 2018 when the company did 5.4 billion so almost exactly the same size as google's current total cloud business and aws is growing faster at the time at 49 don't forget google includes in its cloud numbers a big chunk of high margin software aws at the time had an operating profit of 1.4 billion that quarter around 26 of its revenues so it was a highly profitable business about as profitable as cisco's overall business which again is a great business this is what happens when you're number three and didn't get your head out of your ads fast enough now in fairness google still gets high marks on the quality of its technology according to corey quinn of the duck bill group amazon and google cloud are what he called neck and neck with regard to reliability with microsoft azure trailing because of significant disruptions in the past these comments were made last week in a bloomberg article despite some recent high-profile outages on aws not surprisingly a microsoft spokesperson said that the company's cloud offers industry-leading reliability and that gives customers payment credits after some outages thank you turning to microsoft and cloud news microsoft's overall cloud business surpassed 22 billion in the december quarter up 32 percent year on year like google microsoft includes application software and sas offerings in its cloud numbers and gives little nuggets of guidance on its azure infrastructure as a service business by the way we estimate that azure comprises about 45 percent of microsoft's overall cloud business which we think hit a 40 billion run rate last quarter microsoft guided in its earning call that recent declines in the azure growth rates will reverse in q1 and that implies sequential growth for azure and finally it was announced that the ftc not the doj will review microsoft's announced 75 billion acquisition of activision blizzard it appears ftc chair lena khan wants to take this one on herself she of course has been very outspoken about the power of big tech companies and in recent a recent cnbc interview suggested that the u.s government's actions were a meaningful contributor back then to curbing microsoft's power in the 90s i personally found that dubious just ask netscape wordperfect novell lotus and spc the maker of harvard presentation graphics how effective the government was in curbing microsoft power generally my take is that the u s government has had a dismal record regulating tech companies most notably ibm and microsoft and it was market forces company hubris complacency and self-inflicted wounds not government intervention these were far more effective than the government now of course if companies are breaking the law they should be punished but the u.s government hasn't been very productive in its actions and the unintended consequences of regulation could be detrimental to the u.s competitiveness in the race with china but i digress lastly in the news amazon announced earnings thursday and the company's value increased by 191 billion dollars on friday that's a record valuation gain for u.s stocks aws amazon's profit engine grew 40 percent year on year for the quarter it closed the year at 62 billion dollars in revenue and at a 71 billion dollar revenue run rate aws is now larger than ibm which without kindrel is at a 67 billion dollar run rate just for context ibm's revenue in 2011 was 107 billion dollars now there's a conversation going on in the media and social that in order to continue this growth and compete with microsoft that aws has to get into the sas business and offer applications we don't think that's the right strategy for amp from for amazon in the near future rather we see them enabling developers to compete in that business finally amazon disclosed that 48 of its top 50 customers are using graviton 2 instances why is this important because aws is well ahead of the competition in custom silicon chips is and is on a price performance curve that is far better than alternatives especially those based on x86 this is one of the reasons why we think this business is not a race to the bottom aws is being followed by google microsoft and alibaba in terms of developing custom silicon and will continue to drive down their internal cost structures and deliver price performance equal to or better than the historical moore's law curves so that's the recent news for the big u.s cloud providers let's now take a look at how the year ended for the big four hyperscalers and look ahead to next year here's a table we've shown this view before it shows the revenue estimates for worldwide is and paths generated by aws microsoft alibaba and google now remember amazon and alibaba they share clean eye ass figures whereas microsoft and alphabet only give us these nuggets that we have to interpret and we correlate those tidbits with other data that we gather we're one of the few outlets that actually attempts to make these apples to apples comparisons there's a company called synergy research there's another firm that does this but i really can't map to their numbers their gcp figures look far too high and azure appears somewhat overestimated and they do include other stuff like hosted private cloud services but it's another data point that you can use okay back to the table we've slightly adjusted our gcp figures down based on interpreting some of alphabet's statements and other survey data only alibaba has yet to announce earnings so we'll stick to a 2021 market size of about 120 billion dollars that's a 41 growth rate relative to 2020 and we expect that figure to increase by 38 percent to 166 billion in 2022 now we'll discuss this a bit later but these four companies have created an opportunity for the ecosystem to build what we're calling super clouds on top of this infrastructure and we're seeing it happen it was increasingly obvious at aws re invent last year and we feel it will pick up momentum in the coming months and years a little bit more on that later now here's a graphical view of the quarterly revenue shares for these four companies notice that aws has reversed its share erosion and is trending up slightly aws has accelerated its growth rate four quarters in a row now it accounted for 52 percent of the big four hyperscaler revenue last year and that figure was nearly 54 in the fourth quarter azure finished the year with 32 percent of the hyper scale revenue in 2021 which dropped to 30 percent in q4 and you can see gcp and alibaba they're neck and neck fighting for the bronze medal by the way in our recent 2022 predictions post we said google cloud platform would surpass alibaba this year but given the recent trimming of our numbers google's got some work to do for that prediction to be correct okay just to put a bow on the wikibon market data let's look at the quarterly growth rates and you'll see the compression trends there this data tracks quarterly revenue growth rates back to 20 q1 2019 and you can see the steady downward trajectory and the reversal that aws experienced in q1 of last year now remember microsoft guided for sequential growth and azure so that orange line should trend back up and given gcp's much smaller and big go to market investments that we talked about we'd like to see an acceleration there as well the thing about aws is just remarkable that it's able to accelerate growth at a 71 billion run rate business and alibaba you know is a bit more opaque and likely still reeling from the crackdown of the chinese government we're admittedly not as close to the china market but we'll continue to watch from afar as that steep decline in growth rate is somewhat of a concern okay let's get into the survey data from etr and to do so we're going to take some time series views on some of the select cloud platforms that are showing spending momentum in the etr data set you know etr uses a metric we talked about this a lot called net score to measure that spending velocity of products and services netscore basically asks customers are you spending more less or the same on a platform and a vendor and then it subtracts the lesses from the moors and that yields a net score this chart shows net score for five cloud platforms going back to january 2020. note in the table that the table we've inserted inside that chart shows the net score and shared n the latter metric indicates the number of mentions in the data set and all the platforms we've listed here show strong presence in the survey that red dotted line at 40 percent that indicates spending is at an elevated level and you can see azure and aws and vmware cloud on aws as well as gcp are all nicely elevated and bounding off their october figures indicating continued cloud momentum overall but the big surprise in these figures is the steady climb and the steep bounce up from oracle which came in just under the 40 mark now one quarter is not necessarily a trend but going back to january 2020 the oracle peaks keep getting higher and higher so we definitely want to keep watching this now here's a look at some of the other cloud platforms in the etr survey the chart here shows the same time series and we've now brought in some of the big hybrid players notably vmware cloud which is vcf and other on-prem solutions red hat openstack which as we've reported in the past is still popular in telcos who want to build their own cloud we're also starting to see hpe with green lake and dell with apex show up more and ibm which years ago acquired soft layer which was really essentially a bare metal hosting company and over the years ibm cobbled together its own public cloud ibm is now racing after hybrid cloud using red hat openshift as the linchpin to that strategy now what this data tells us first of all these platforms they don't have the same presence in the data set as do the previous players vmware is the one possible exception but other than vmware these players don't have the spending velocity shown in the previous chart and most are below the red line hpe and dell are interesting and notable in that they're transitioning their early private cloud businesses to dell gr sorry hpe green lake and dell apex respectively and finally after years of kind of staring at their respective navels in in cloud and milking their legacy on-prem models they're finally building out cloud-like infrastructure for their customers they're leaning into cloud and marketing it in a more sensible and attractive fashion for customers so we would expect these figures are going to bounce around for a little while for those two as they settle into a groove and we'll watch that closely now ibm is in the process of a complete do-over arvin krishna inherited three generations of leadership with a professional services mindset now in the post gerschner gerstner era both sam palmisano and ginny rometty held on far too long to ibm's service heritage and protected the past from the future they missed the cloud opportunity and they forced the acquisition of red hat to position the company for the hybrid cloud remedy tried to shrink to grow but never got there krishna is moving faster and with the kindred spin is promising mid-single-digit growth which would be a welcome change ibm is a lot of work to do and we would expect its net score figures as well to bounce around as customers transition to the future all right let's take a look at all these different players in context these are all the clouds that we just talked about in a two-dimensional view the vertical axis is net score or spending momentum and the horizontal axis is market share or presence or pervasiveness in the data set a couple of call-outs that we'd like to make here first the data confirms what we've been saying what everybody's been saying aws and microsoft stand alone with a huge presence many tens of billions of dollars in revenue yet they are both well above the 40 line and show spending momentum and they're well ahead of gcp on both dimensions second vmware while much smaller is showing legitimate momentum which correlates to its public statements alibaba the alibaba in this survey really doesn't have enough sample to make hardcore conclusions um you can see hpe and dell and ibm you know similarly they got a little bit more presence in the data set but they clearly have some work to do what you're seeing there is their transitioning their legacy install bases oracle's the big surprise look what oracle was in the january survey and how they've shot up recently now we'll see if this this holds up let's posit some possibilities as to why it really starts with the fact that oracle is the king of mission critical apps now if you haven't seen video on twitter you have to check it out it's it's hilarious we're not going to run the video here but the link will be in our post but i'll give you the short version some really creative person they overlaid a data migration narrative on top of this one tooth guy who speaks in spanish gibberish but the setup is he's a pm he's a he's a a project manager at a bank and aws came into the bank this of course all hypothetical and said we can move all your apps to the cloud in 12 months and the guy says but wait we're running mission critical apps on exadata and aws says there's nothing special about exadata and he starts howling and slapping his knee and laughing and giggling and talking about the 23 year old senior engineer who says we're going to do this with microservices and he could tell he was he was 23 because he was wearing expensive sneakers and what a nightmare they encountered migrating their environment very very very funny video and anyone who's ever gone through a major migration of mission critical systems this is gonna hit home it's funny not funny the point is it's really painful to move off of oracle and oracle for all its haters and its faults is really the best environment for mission critical systems and customers know it so what's happening is oracle's building out the best cloud for oracle database and it has a lot of really profitable customers running on-prem that the company is migrating to oracle cloud infrastructure oci it's a safer bet than ripping it and putting it into somebody else's cloud that doesn't have all the specialized hardware and oracle knowledge because you can get the same integrated exadata hardware and software to run your database in the oracle cloud it's frankly an easier and much more logical migration path for a lot of customers and that's possibly what's happening here not to mention oracle jacks up the license price nearly doubles the license price if you run on other clouds so not only is oracle investing to optimize its cloud infrastructure it spends money on r d we've always talked about that really focused on mission critical applications but it's making it more cost effective by penalizing customers that run oracle elsewhere so this possibly explains why when the gartner magic quadrant for cloud databases comes out it's got oracle so well positioned you can see it there for yourself oracle's position is right there with aws and microsoft and ahead of google on the right-hand side is gartner's critical capabilities ratings for dbms and oracle leads in virtually all of the categories gartner track this is for operational dvms so it's kind of a narrow view it's like the red stack sweet spot now this graph it shows traditional transactions but gartner has oracle ahead of all vendors in stream processing operational intelligence real-time augmented transactions now you know gartner they're like old name framers and i say that lovingly so maybe they're a bit biased and they might be missing some of the emerging opportunities that for example like snowflake is pioneering but it's hard to deny that oracle for its business is making the right moves in cloud by optimizing for the red stack there's little question in our view when it comes to mission critical we think gartner's analysis is correct however there's this other really exciting landscape emerging in cloud data and we don't want it to be a blind spot snowflake calls it the data cloud jamactagani calls it data mesh others are using the term data fabric databricks calls it data lake house so so does oracle by the way and look the terminology is going to evolve and most of the action action that's happening is in the cloud quite frankly and this chart shows a select group of database and data warehouse companies and we've filtered the data for aws azure and gcp customers accounts so how are these accounts or companies that were showing how these vendors were showing doing in aws azure and gcp accounts and to make the cut you had to have a minimum of 50 mentions in the etr survey so unfortunately data bricks didn't make it just not enough presence in the data set quite quite yet but just to give you a sense snowflake is represented in this cut with 131 accounts aws 240 google 108 microsoft 407 huge [ __ ] 117 cloudera 52 just made the cut ibm 92 and oracle 208. again these are shared accounts filtered by customers running aws azure or gcp the chart shows a net score lime green is new ads forest green is spending more gray is flat spending the pink is spending less and the bright red is defection again you subtract the red from the green and you get net score and you can see that snowflake as we reported last week is tops in the data set with a net score in the 80s and virtually no red and even by the way single digit flat spend aws google and microsoft are all prominent in the data set as is [ __ ] and snowflake as i just mentioned and they're all elevated over the 40 mark cloudera yeah what can we say once they were a high flyer they're really not in the news anymore with anything compelling other than they just you know took the company private so maybe they can re-emerge at some point with a stronger story i hope so because as you can see they actually have some new additions and spending momentum in the green just a lot of customers holding steady and a bit too much red but they're in the positive territory at least with uh plus 17 percent unlike ibm and oracle and this is the flip side of the coin ibm they're knee-deep really chest deep in the middle of a major transformation we've said before arvind krishna's strategy and vision is at least achievable prune the portfolio i.e spin out kindrel sell watson health hold serve with the mainframe and deal with those product cycles shift the mix to software and use red hat to win the day in hybrid red hat is working for ibm's growing well into the double digits unfortunately it's not showing up in this chart with little database momentum in aws azure and gcp accounts zero new ads not enough acceleration and spending a big gray middle in nearly a quarter of the base in the red ibm's data and ai business only grew three percent this last quarter and the word database wasn't even mentioned once on ibm's earnings call this has to be a concern as you can see how important database is to aws microsoft google and the momentum it's giving companies like snowflake and [ __ ] and others which brings us to oracle with a net score of minus 12. so how do you square the momentum in oracle cloud spending and the strong ratings and databases from gartner with this picture good question and i would say the following first look at the profile people aren't adding oracle new a large portion of the base 25 is reducing spend by 6 or worse and there's a decent percentage of the base migrating off oracle with a big fat middle that's flat and this accounts for the poor net score overall but what etr doesn't track is how much is being spent rather it's an account based model and oracle is heavily weighted toward big spenders running mission critical applications and databases oracle's non-gaap operating margins are comparable to ibm's gross margins on a percentage basis so a very profitable company with a big license and maintenance in stall basin oracle has focused its r d investments into cloud erp database automation they've got vertical sas and they've got this integrated hardware and software story and this drives differentiation for the company but as you can see in this chart it has a legacy install base that is constantly trying to minimize its license costs okay here's a little bit of different view on the same data we expand the picture with the two dimensions of net score on the y-axis and market share or pervasiveness on the horizontal axis and the table insert is how the data gets plotted y and x respectively not much to add here other than to say the picture continues to look strong for those companies above the 40 line that are focused and their focus and have figured out a clear cloud strategy and aren't necessarily dealing with a big install base the exception of course is is microsoft and the ones below the line definitely have parts of their portfolio which have solid momentum but they're fighting the inertia of a large install base that moves very slowly again microsoft had the advantage of really azure and migrating those customers very quickly okay so let's wrap it up starting with the big three cloud players aws is accelerating and innovating great example is custom silicon with nitro and graviton and other chips that will help the company address concerns related to the race to the bottom it's not a race to zero aws we believe will let its developers go after the sas business and for the most part aws will offer solutions that address large vertical markets think call centers the edge remains a wild card for aws and all the cloud players really aws believes that in the fullness of time all workloads will run in the public cloud now it's hard for us to imagine the tesla autonomous vehicles running in the public cloud but maybe aws will redefine what it means by its cloud microsoft well they're everywhere and they're expanding further now into gaming and the metaverse when he became ceo in 2014 many people said that satya should ditch xbox just as an aside the joke among many oracle employees at the time was that safra katz would buy her kids and her nieces and her nephews and her kids friends everybody xbox game consoles for the holidays because microsoft lost money for everyone that they shipped well nadella has stuck with it and he sees an opportunity to expand through online gaming communities one of his first deals as ceo was minecraft now the acquisition of activision will make microsoft the world's number three gaming company by revenue behind only 10 cent and sony all this will be powered by azure and drive more compute storage ai and tooling now google for its part is battling to stay relevant in the conversation luckily it can afford the massive losses it endures in cloud because the company's advertising business is so profitable don't expect as many have speculated that google is going to bail on cloud that would be a huge mistake as the market is more than large enough for three players which brings us to the rest of the pack cloud ecosystems generally and aws specifically are exploding the idea of super cloud that is a layer of value that spans multiple clouds hides the underlying complexity and brings new value that the cloud players aren't delivering that's starting to bubble to the top and legacy players are staying close to their customers and fighting to keep them spending and it's working dell hpe cisco and smaller predominantly on-plan prem players like pure storage they continue to do pretty well they're just not as sexy as the big cloud players the real interesting activity it's really happening in the ecosystem of companies and firms within industries that are transforming to create their own digital businesses virtually all of them are running a portion of their offerings on the public cloud but often connecting to on-premises workloads and data think goldman sachs making that work and creating a great experience across all environments is a big opportunity and we're seeing it form right before our eyes don't miss it okay that's it for now thanks to my colleague stephanie chan who helped research this week's topics remember these episodes are all available as podcasts wherever you listen just search breaking analysis podcast check out etr's website at etr dot ai and also we publish a full report every week on wikibon.com and siliconangle.com you can get in touch with me email me at david.velante siliconangle.com you can dm me at divalante or comment on my linkedin post this is dave vellante for the cube insights powered by etr have a great week stay safe be well and we'll see you next time [Music] you

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante by our estimates aws will generate around nine billion dollars in storage revenue this year and is now the second largest supplier of enterprise storage behind dell we believe aws storage revenue will hit 11 billion in 2022 and continue to outpace on-prem storage growth by more than a thousand basis points for the next three to four years at its third annual storage day event aws signaled a continued drive to think differently about data storage and transform the way customers migrate manage and add value to their data over the next decade hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll give you a brief overview of what we learned at aws's storage day share our assessment of the big announcement of the day a deal with netapp to run ontap natively in the cloud as a managed service and we'll share some new data on how we see the market evolving with aws executive perspectives on its strategy how it thinks about hybrid and where it fits into the emerging data mesh conversation let's start with a snapshot of the announcements made at storage day now as with most aws events this one had a number of announcements and introduced them at a pace that was predictably fast and oftentimes hard to follow here's a quick list of most of them with some comments on each the big big news is the announcement with netapp netapp and aws have engineered a solution which ports the rich netapp stack onto aws and will be delivered as a fully managed service this is a big deal because previously customers either had they had to make a trade-off they had a settle for cloud-based file service with less functionality than you could get with netapp on-prem or it had to lose the agility and elasticity of the cloud and the whole pay-by-the-drink model now customers can get access to a fully functional netapp stack with services like data reduction snaps clones the full multi-protocol support replication all the services ontap delivers in the cloud as a managed service through the aws console our estimate is that 80 of the data on-prem is stored in file format and that's not the revenue but that's the data and we all know about s3 object storage but the biggest market from a capacity standpoint is file storage you know this announcement reminds us quite a bit of the vmware cloud on aws deal but applied to storage netapp's aunt anthony lai told me dave this is bigger and we're going to come back to that in a moment aws announced s3 multi-region access points it's a service that optimizes storage performance it takes into account latency network congestion and the location of data copies to deliver data via the best route to ensure our best performance this is something we've talked about for quite some time using metadata to optimize that that access aws also announced improvements to s3 tiering where it will no longer charge for small objects of less than 128k so for example customers won't be charged for most metadata and other smaller objects remember aws years ago hired a bunch of emc engineers and those guys built a lot of tiering functionality into their boxes and we'll come back to that later in this episode aws also announced backup and monitoring tools to ensure backups are in compliance with regulations and corporate edicts this frankly is table stakes and was was overdue in my view aws also made a number of other announcements that have been well covered in the press around block storage and simplified data migration tools so we'll leave that to your perusal through other outlets i want to come back to the big picture on the market dynamics now as we've reported in previous breaking analysis segments aws storage revenue is on a path to 10 billion dollars we reported this last year this chart puts the market in context it shows our estimates for worldwide enterprise storage revenue in the calendar year 2021. this data is meant to include all storage revenue including primary secondary and archival storage and related maintenance services dell is the leader in the 60 billion market with aws now hot on its tail with 15 of the market in terms of the way we've cut it now in the pre-cloud days customers would tell us our storage strategy is the following we buy emc for block and netapp for file keeping it simple while remnants of this past habit continue the market is definitely changing as you can see here the companies highlighted in red represent the growing hyperscaler presence and you can see in the pi on the right they now account for around 25 percent of the market and they're growing much much faster than the on-prem vendors well over that thousand basis points when you combine them all a couple of other things to note in the data we're excluding kindrel from ibm's figures that's ibm spinout but including our estimates of storage software for example spectrums protect that is sold as part of the ibm cloud but not reported in ibm's income statement by the way pre-kindred spin ibm storage business we believe would approach the size of netapp's business now in the yellow we've highlighted the portion of hyper-converged that comprises storage this includes vmware nutanix cisco and others vmware and nutanix are the largest hci players but in total the storage piece of that market is less than two billion okay so the way to look at this market is changing traditional on-prem is vying for budgets with cloud storage services which are rapidly gaining presence in the market and we're seeing the on-prem piece evolve of course into as a service models with hpe's green lake dell's apex and other on-prem cloud-like models now let's come back to the netapp aws deal netapp as we know is the gold standard for file services they've been the market leader for a long long time and other than pure which is considerably smaller netapp is the one company that consistently was able to beat emc in the market emc developed its its nas business and developed on its own nasdaq and it bought isilon to compete with netapp with isilon's excellent global file system but generally netapp remains the best file storage company today now emerging disruptors like cumulo vast weka they would take issue with this statement and rightly so as they have really promising technology but netapp remains the king of the file hill you can't debate that now netapp however has had some serious headwinds as the largest independent storage player as seen in this etr chart the data shows a nine-year view of netapp's presence in the etr survey presence is referred to by etr as market share it's not traditional market share it measures the pervasiveness of responses in the etr survey over a thousand customers each quarter so the percentage of mentions essentially that netapp is getting and you can see well netapp remains a leader it has had a difficult time expanding its tam and it's become frankly less relevant in the eye in the grand scheme and the grand eyes of it buyers the company hit headwinds when it began migrating its base to ontap 8 and was late riding a number of new waves including flash but generally it is recovered from those headwinds and it's really now focused on the cloud opportunity opportunity as evidenced by this deal with aws now as i said earlier netapp evp anthony lai told me that this deal is bigger than vmware cloud on aws like me you may be wondering how can that be vmware is the leader in the data center it has half a million customers its deal with aws has been a tremendous success as seen in this etr chart the data here shows spending momentum or net score from when vmware cloud on aws was picked up in the etr surveys with a meaningful n which today is approaching 100 responses in the survey the yellow line is there for context it's vmware's overall business so repeat it buyers who responded vmware versus specifically vmware cloud on aws so you see vmware overall has a huge presence in the survey more than 600 n the red line is vmware cloud on aws and that red dotted line you see that that's that's my magic 40 mark anything above that line we consider elevated net score or spending velocity and while we saw some deceleration earlier this year in that line that top line for vmware cloud vmware cloud and aws has been consistently showing well in the survey well above that 40 percent line so could this netapp deal be bigger than vmware cloud on aws well probably not in our view but we like the strategy of netapp going cloud native on aws and aws's commitment to deliver this as a managed service now where could get interesting is across clouds in other words if netapp can take a page out of snowflake and build an abstraction layer that hides the underlying complexity of not only the aws cloud but also gcp and azure where you log into the netapp cloud netapp data cloud if you will just go ahead and steal steal it from snowflake and then netapp optimizes your on-prem your aws your azure and or your gcp file storage we see that as a winning strategy that could dramatically expand netapp's tam politically it may not sit well with aws but so what netapp has to go multi-cloud to expand that tam when the vmware deal was announced many people felt it was a one-way street where all the benefit would eventually accrue to aws in reality this has certainly been a near-term winner for aws and vmware and of course importantly vmware and aws join customers now longer term it's going to clearly be a win for aws because it gets access to vmware's customer base but we also think it will serve vmware well because it gives the company a clear and concise cloud strategy especially if it can go across clouds and eventually get to the edge so with this netapp aws deal will it be as big probably not in our view but it is big netapp in our view just leapfrogged the competition because of the deep engineering commitment aws has made this isn't a marketplace deal it's a native managed service and we think that's pretty huge okay we're going to close with a few thoughts on aws storage strategy and some other thoughts on hybrid talk about capturing mission critical workloads and where aws fits in the overall data mesh conversation which is one of our favorite topics first let's talk about aws's storage strategy overall as with other services aws approach is to give builders access to tools at a very granular level that means it does mean a lot of apis and access to primitives that are essentially building blocks while this may require greater developer skills it also allows aws to get to market quickly and add functionality faster than the competition enterprises however where they will pay up for solutions so this leaves some nice white space for partners and also competitors and especially the on-prem folks but let's hear from an aws executive i spoke to milan thompson bucheveck an aws vp on the cube and asked her to describe aws's storage strategy here's what she said play the clip we are dynamically and constantly evolving our aws storage services based on what the application and the customer want that is fundamentally what we do every day we talked a little bit about those deployments that are happening right now dave that is something that idea of constant dynamic evolution just can't be replicated by on-premises where you buy a box and it sits in your data center for three or more years and what's unique about us among the cloud services is again that perspective of the 15 years where we are building applications in ways that are unique because we have more customers and we have more customers doing more things so you know i i've said this before uh it's all about speed of innovation dave time and change wait for no one and if you're a business and you're trying to transform your business and base it on a set of technologies that change rapidly you have to use aws services i mean if you look at some of the launches that we talk about today and you think about s3's multi-region access points that's a fundamental change for customers that want to store copies of their data in any number of different regions and get a 60 performance improvement by leveraging the technology that we've built up over over time the the ability for us to route to intelligently router requests across our network that and fsx for netapp ontap nobody else has these capabilities today and it's because we are at the forefront of talking to different customers and that dynamic evolution of storage that's the core of our strategy so as you hear and can see by milan's statements how these guys think outside the box mentality at the end of the day customers want rock solid storage that's dirt cheap and lightning fast they always have and they always will but what i'm hearing from aws is they think about delivering these capabilities in the broader context of an application or a business think deeper business integration not the traditional suppliers don't think about that as well but the services mentality the cloud services mentality is different than dropping off a box at a loading dock turning it over to a professional services organization and then moving on to the next deal now i also had a chance to speak with wayne dusso he's another aws vp in the storage group wayne do so is a long time tech athlete for years he was responsible for building storage arrays at emc aws as i said hired a bunch of emcs years ago and those guys did a lot of tiered storage so i asked wayne what's the difference in mentality when you're building boxes versus cloud services here's what he said you have physical constraints you have to worry about the physical resources on that device for the life of that device which is years think about what changes in three or five years think about the last two years alone and what's changed can you imagine having being constrained by only uh having boxes available to you during this last two years versus having the cloud and being able to expand or contract based on your business needs that would be really tough right and it has been tough and that's why we've seen customers from every industry accelerate uh their use of the cloud during these last two years so i get that so what's your mindset when you're building storage services and data services so so each of the surfaces that we have in object block file movement services data services each of them provides very specific customer value in each are deeply integrated with the rest of aws so that when you need object services you start using them the integrations come along with you when if you're using traditional block we talked about ebs io2 block express when using file just the example alone today with ontap you know you get to use what you need when you need it and the way that you're used to using it without any concern so so the big difference is no constraints in the box but lots of opportunities to blend in with other services now all that said there are cases where the box is gonna win because of locality and and physics and latency issues you know particularly where latency is king that's where a box is gonna be advantageous and we'll come back to that in a bit okay but what about hybrid how does aws think about hybrid and on-prem here's my take and then let's hear from milan again the cloud is expanding it's moving out to the edge and aws looks at the data center as just another edge node and it's bringing its infrastructure as code mentality to that edge and of course to data centers so if aws is truly customer centric which we believe it is it will naturally have to accommodate on-prem use cases and it is doing just that here's how milan thompson-bucheveck explained how aws is thinking about hybrid roll the clip for us dave it always comes back to what the customer is asking for and we were talking to customers and they were talking about their edge and what they wanted to do with it we said how are we going to help and so if i just take s3 for outposts as an example or ebs and outposts you know we have customers like morningstar and morningstar wants outposts because they are using it as a step in their journey to being on the cloud if you take a customer like first adudabi bank they're using outposts because they need data residency for their compliance requirements and then we have other customers that are using outposts to help like dish networks as an example to place the storage as close as account to the applications for low latency all of those are customer driven requirements for their architecture for us dave we think in the fullness of time every customer and all applications are going to be on the cloud because it makes sense and those businesses need that speed of innovation but when we build things like our announcement today of fxs for netapp ontap we build them because customers asked us to help them with their journey to the cloud just like we built s3 and evs for outposts for the same reason so look this is a case where the box or the appliance wins latency matters as we said and aws gets that this is where matt baker of dell is right it's not a zero-sum game this is especially accurate as it pertains to the cloud versus on-prem discussion but a budget dollar is a budget dollar and the dollar can't go to two places so the battle will come down to who has the best solution the best relationships and who can deliver the most rock solid storage at the lowest cost and highest performance let's take a look at mission critical workloads for a second we're seeing aws go after these it's doing a database it's doing it with block storage we're talking about oracle sap microsoft sql server db2 that kind of stuff high volume oltp transactions mission critical work now there's no doubt that aws is picking up a lot of low hanging fruit with business critical workloads but the really hard to move work isn't going without a fight frankly it's not going that fast aws and mace has made some improvements to block storage to remove some of the challenges related but generally we see this is a very long road ahead for aws and other cloud suppliers oracle is the king of mission critical work along with ibm mainframes and those infrastructures generally it's not easy to move to the cloud it's too risky it's too expensive and the business case oftentimes isn't there because very frequently you have to freeze applications to do so what generally what people are doing is they're building an abstraction layer over that putting that abstraction layer maybe in the cloud building new apps that can connect to the back end and the into the cloud but that back end is largely cemented and fossilized look it's all in the definition no doubt there's plenty of mission critical work that is going to move but just really depends on how you define it even aws struggles to move its most critical transaction systems off of oracle but we'll continue to keep an open mind there it's just that today we define the most mission-critical workloads as we define them we don't see a lot of movement to the hyperscale clouds and we're going to close with some thoughts on data mesh so one of our favorite topics we've written extensively about this and interviewed and are collaborating with jamaa dagani who has coined the term and we've announced a media collaboration with the data mesh community and believe it's a strong direction for the industry so we wanted to understand how aws thinks about data mesh and where it fits in the conversation here's what milan had to say about that play the clip we have customers today that are taking the data mesh architectures and implementing them with aws services and dave i want to go back to the start of amazon when amazon first began we grew because the amazon technologies were built in microservices fundamentally a data match is about separation or abstraction of what individual components do and so if i look at data mesh really you're talking about two things you're talking about separating the data storage and the characteristics of data from the data services that interact and operate on that storage and with data mesh it's all about making sure that the businesses the decentralized business model can work with that data now our aws customers are putting their storage in a centralized place because it's easier to track it's easier to view compliance and it's easier to predict growth and control costs but we started with building blocks and we deliberately built our storage services separate from our data services so we have data services like lake formation and glue we have a number of these data services that our customers are using to build that customized data mesh on top of that centralized storage so really it's about at the end of the day speed it's about innovation it's about making sure that you can decentralize and separate your data services from your storage so businesses can go faster so it's very true that aws has customers that are implementing data mess data mesh data mess data mesh can be a data mess if you don't do it right jpmorgan chase is a firm that is doing that we've we've covered that they've got a great video out there check out the breaking analysis archive you'll see that hellofresh has also initiated a data mesh architecture in the cloud and several others are starting to pop up i think the point is the issues and challenges around data mesh are more organizational and process related and less focused on the technology platform look data by its very nature is decentralized so when mylan talks about customers building on centralized storage that's a logical view of the storage but not necessarily physically centralized it may be in a in a hybrid device it may be a copy that lives outside of that same physical location this is an important point as jpmorgan chase pointed out the data mesh must accommodate data products and services that are in the cloud and also on-prem it's got to be inclusive the data mesh looks at the data store as a node on the data mesh it shouldn't be confined by the technology whether it's a data warehouse a data hub a data mart or an s3 bucket so i would say this while people think of the cloud as a centralized walled garden and in many respects it is that very same cloud is expanding into a massively distributed architecture and that fits with the data mesh architectural model as i say the big challenges of data mesh are less technical and more cultural and we're super excited to see how data mesh plays out over time and we're really excited to be part of part of the the community and a media partner of the data mesh community okay that's it for now remember i publish each week on wikibon.com and siliconangle.com and these episodes they're all available as podcasts all you do is search for breaking analysis podcasts you can always connect on twitter i'm at d vellante or email me at david.velante at siliconangle.com i appreciate the comments you guys make on linkedin and don't forget to check out etr.plus for all the survey action this is dave vellante for the cube insights powered by etr be well and we'll see you next time [Music] you

>>Trump and low park California in the heart of Silicon Valley. It's the cube covering cloud now. Awards 2020 brought to you by Silicon angle media. Now here's Sonya to garden. >>Hi and welcome to the cube. I'm your host Sonia to Gary. And we're on the ground at Facebook headquarters in Menlo park, California covering cloud now's top women entrepreneurs in cloud innovation awards. Joining us today is modest to get day, the cofounder of branch motto. Welcome to the cube. Thank you so much for having me. So you're receiving an award today for being a top female entrepreneur in cloud innovation. How does that feel? >>It feels awesome. I'm humbled to be in such amazing company with some great ladies that have started really great companies, so pretty excited to be here. >>Great. So just give us a brief overview of your background. >>Sure. Uh, my background, well, I probably don't have the regular Silicon Valley background. I was born and raised in communist Romania, uh, in a pretty small town called Barco, uh, in the Rijo Romania called Moldavia. I was very good at math. Um, and my parents, uh, pushed me to explore applying to schools in the United States, which I did. Um, and I applied to 23 colleges and the DOB, uh, getting a full scholarship from Cornell where I studied computer engineering. Um, I dreamt of working for big companies, which I did for a while, uh, until one day when I remember I was doing a master's to Stanford and one professor told me I was, I told him, I was like, I don't think I could ever start a company. And he was like, what if you don't? Like, who do you think? Well, so I was like, Oh, I never thought about it that way. Um, and that's when I think my entrepreneurial dream started. And a few years later I started, um, phone co-founders and started a few different companies that eventually ended up being branch. That's a long answer to your question. >>No, that's perfect. So what inspired you to start branch and how did you navigate getting funding? >>Um, it's a, it's an interesting story. I think we came together, my cofounders and I were in business school, Stanford, we all want to start a company and we did what all business school students do. We just started something that sounded cool but maybe it didn't have such a big market. Um, and uh, then pivoted and ended up building an app. So we worked on an app or the mobile photo printing app called kindred. We worked on the Apple for quite some time. It was, um, over a year we sold over 10,000 photo books. I've seen a lot of images of babies and pets and we reviewed manually every single book and we had a really hard time growing. So if you think about the mobile ecosystem today, and if you compare it to the web on the web, the web is a pretty democratic system. >>You, um, you have the HTTP protocol and you are able to put together a website and make sure that the website gets found through social media to research to all this other platforms. Apps are much harder to discover. Um, the app ecosystem is owned by the platforms. And we had a really hard time applying. I was coming from the web world and all the things I had done to market websites just in the work with the apps. And it was hard. Uh, you know, you could only Mark at the top and how out all the content inside the app. That's a lot more interesting than the app itself. So we, we felt that we were like really, really struggling and we would need it to kind of shut the company down. And then we realized that one of the things that we were trying to build for us to a disability to allow people to share and get to content within the app, which is in our case was photo books was actually something that everyone in the ecosystem needed. >>So we, we asked a lot of people and it seemed like this was a much bigger need. Uh, then, you know, the photo books. And, uh, we had started to already build it to solve our own problem. So we started building a linking and attribution platform, um, to help other app. And mobile companies grow and understand their user journey and help build like interesting connections for the user. So, you know, our mission is to, um, to help people discover content within apps, uh, through links that always work. Uh, and it's been a wonderful, like an F pretty exciting journey ever since. That's really inspiring and, and solving a real world problem, a real world problem. >> So it's interesting when you ask about fundraising. Uh, it was so hard to raise money for the photo book app. And we raised actually from, uh, uh, pay our ventures and they actually, even now I remember, uh, the guy patch man sat us down in a very Silicon Valley fashion at the rosewoods and was a very hot day and there was like Persian tea being served and he gave us money and he said, you know, I just want to do something. >>I am not investing in the idea. I'm investing in you as a team. Uh, and if you pivot away from photo books, you know, uh, which we did and I think we pivoted the way because we ended up finding a much, much bigger problem. And we felt that, you know, we could actually make a, an actual change into the mobile cloud ecosystem. And that's how, that's how it all started. Uh, and it wasn't actually was easier to raise money after we had a really big problem. We had a good team that had been working together for almost two years. We had product market fit. >> So, uh, so yeah. So what are some things that have influenced you in your journey to become an entrepreneur? Um, some things interesting. Um, well I would say the Stanford design school. Um, I think I came from working for Siemens, which is a giant company. >>And I started doing this project and I remember one of the projects was we built, um, an, uh, a toolbar we were supposed to where we're doing a project for, um, Firefox, which, you know, Mozilla was utilize browser, uh, which was in some ways the precursor to Chrome. And we're trying to help it grow. And we didn't know. And one of the ideas was we, we built this toolbar for eBay and eBay hadn't had a toolbar for Firefox. And we, you know, we were some students for two weeks. We build this toolbar bar and then someone bought the car to our toolbar. And I was like, wow. Like how incredible is it that you can just kind of put your thoughts on something and just get something done and make an actual impact someone's life. And I think that's when the spark of the entrepreneurial spark, it was during that time that, um, Michael Dearing course, a professor and one of my D school courses also told me the thing that if I don't do it, who will? >>And I think that's when, that's when it all started. I think the things that have helped me along the way, I mean, my cofounders, I think I've been incredibly lucky to find cofounders that are incredibly eager to be good at what they do and also very different from me. So I think if you think about why many companies implode, it's usually because of the founding team. We've been together for almost seven years now. Uh, and it's been an interesting way to find balance through so many failed companies. So many stages of growth branches over 400 people now. So you know, our roles have shifted over time and it's been like, uh, an interesting journey and I think recently more in the past few years, I think one of the things that has helped me find balance has been having a group of female founder friends. Um, it's really interesting to have a peer group that you can talk about things with and be vulnerable with. >>And I didn't have that in the first few years and I wish I did. My cofounders are amazing, but I think in some ways we are also coworkers. So having an external group has been incredibly helpful in helping me find balance in my life. So I think a lot of women feel that way. They feel that it's really difficult to navigate in this male dominated workspace. So what advice would you give to female entrepreneurs in this space? Yeah, I mean it is really hard and I think confidence is something that I've noticed with myself, my peers, the women that I've invested in. I do investing on the side. Uh, I would say believe that you can do it. Uh, believe that the only, the sky's the limit believe that, um, you can do more than you think you can do. I think sometimes, uh, you know, our, our background and the society around us, um, doesn't necessarily believe that we can do the things that we can do as women. >>So I think believing in ourselves is incredibly important. I think the second part is making sure that we build networks around us. They can tell us that they believe in us. They can push us beyond what we think is possible. And I think those networks can be peers. Like my funeral founder group, we call each other for ministers or, uh, I think investors. Um, I think it can be mentors. And I've had, I've been lucky enough to have amazing women investors, uh, women mentors. Um, and I, it's been a really incredible to see how much they helped me grow. So I think the interesting thing is when I was just getting started, I didn't look for those communities. I didn't look for a guy. I just kinda felt, Oh, I can do it. But I didn't actually realize that being part of a community, being vulnerable, asking questions can actually go help me go so much further. Um, so the advice would be to start early and find a small group of people that you can actually rely on, and that can be your advocates and your champions. So, yeah. Well, thank you so much for those words of wisdom. Thanks for having me. Thank you for being on the cube. I'm your host, Sonia to Gary. Thanks for watching the cube. Stay tuned for more.

>> Live from Las Vegas, it's The Cube, covering Magento Imagine 2019. Brought to you by Adobe. >> Welcome to The Cube. Lisa Martin with Jeff Frick, live at The Wynn Las Vegas, for Magento Imagine 2019. This is a really buzzy event. All e-commerce innovation, tech talks, with about 3,500 folks, and we're excited to welcome to The Cube Tina Mulqueen, CEO of Kindred PR Marketing Agency as well as contribute with Forbes, Digital Trends, expert on e-commerce, I would say. Welcome to The Cube. >> Thank you so much for having me. I'm happy to be here. >> So we were talking about influencer marketing before we went live. And you have been doing, been working in that kind of before it was even a concept. We were just saying how much marketing has changed in the last few years alone, and how brands have had to to survive and be profitable, evolve with that. Give us a bit of a perspective, first on kind of Kindred PR, what you're doing, how you got involved in influencer marketing. >> Sure, so I was really fortunate to have some great mentors early in my marketing career that kind of ushered me along in the right direction and said hey, I think we should really pay attention to this whole Twitter thing and what's happening with these real, everyday people that are amassing a following on Twitter, and that's really where it started was on that platform. So I ended up on a team for CBS that did some of the influencer marketing for Vanity Fair and for their coverage of The Insider and Entertainment Tonight, and we would work with them to get event coverage to trend online. And as you mentioned, that was before, really, we knew what influencer marketing was. It wasn't really, it didn't have to a name, so to speak, at that time. And so I learned a lot from then, and we have kind of come full circle with influencer marketing, where it, I was at first working with these sort of micro influencers, as we would call them now. And then it was a lot of brands working with more of the celebrity influencers, like the Kim Kardashians of the world, and now it's gone back to brands are really interested in these micro influencers again because of the concept of authenticity, which is a big one right now, that marketers are paying attention to. >> Exactly what I was going to say. >> So how do they dance around the authenticity? It's such an interesting and knife edge, right? Because you want people to promote your products because they like them, and that's the original celebrity endorsement back in the early days, right? People actually did use the product that they endorsed. But now you get paid endorsements, and people can see through that. At the same time, it obviously has some results, or people would not continue to invest, and now it's come full circle, whereas you said because of the internet, I with some particular interest can reach a huge number of people around a really small interest set, because of the distribution of the internet. >> Right. So what's interesting is, influencer marketing, when we first really started talking about influencer marketing, we treated it as word-of-mouth marketing. And it had some incredible benefits over some more traditional kinds of marketing because it was word of mouth. And then because influencer marketing had a lot of investments, brands were investing heavily in influencer marketing, and we were dealing more with celebrity influencers, consumers became smarter as well during this time. And then they started looking at these celebrity endorsements and realizing that these are not real endorsements. And so I think that's where we're seeing this shift back to micro influencers, and people that are really using the products that these brands are touting. >> But how does a brand, how do they engage with the micro influencer? >> Actually, there's a really great case study that I always use as an example of this, and it's actually BECCA Cosmetics, which, BECCA's one of the, I think the number one, sales cosmetic line in Sephora. And they reached out, I think it was about a year ago, maybe a couple of years ago now. They reached out to an influencer because they realized that their website traffic was going up every time a certain influencer would go live on YouTube and was using their products. So BECCA reached out to this influencer that was organically using the products, and collaborated with the influencer to create a line of products of her own. And that really, I think they sold out within the first hour when they actually went live with the product line. So that's a great example of how to engage with an influencer that is organically using your brand, and making sure that you're also including their audience, in, like, the iteration of the product, because then the audience of the influencer is also invested. >> And what defines influencer versus a micro influencer? I imagine the sheer volume of followers, but there's got to be more to it than that, because there's this really cool example that you gave, what BECCA Cosmetics found was much more probably authenticity. So talk to us about not just the number drivers there, but some of the other, I mean, it's one thing to be able to blast something to 100,000 people. It's a whole other thing to actually be able to engage their followers and convert it to a transaction. >> Right. So I think that often when we hear brands talking about micro or macro influencers, they really are talking about the number of followers, but I think you bring up a really great point with respect to that level of engagement of that following and how to really tap into somebody that is engaging their following. So I think brands are going toward actual experts in their field, or actual experts in the product line in a bigger capacity now because they know that what they say is going to be more meaningful to their audience and more engaging to their audience, rather than based on number of followers alone. So there's a lot of different things that are going into play to create a better context for marketing. >> I'm curious how other metrics have evolved beyond just the transaction. So there's the followers, and then, you know, there's obviously transactions, as you said, there's website traffic. But as people, as brands are starting to realize that engagement, ongoing engagement, interaction with content is part of the relationship, separate from and a value to the actual transaction. How have their metrics changed? How are they reviewing these programs? I'm sure a lot of it at first was, "Well, we hope it works, we think it's working." But how has that matured over time? >> It definitely has matured, and there are some platforms out there that will try to quantify influencer marketing in different ways than we've seen in the past. It's gotten a lot more sophisticated. That said, marketers still have a real challenge ahead of them in terms of quantifying their efforts in a meaningful way, because it's still hard to put a number to brand sentiment. And that's a lot of what influencer marketing is. >> Right. And is it, from an investment point of view, I always think of people with a large bucket of money, right, they put a very small piece in their venture fund, which has a real low probability of a hit, but if it hits, it hits big. And when they're budgeting for the influencer program, is it kind of like that? You know, we've got this carve-out that we are not quite sure what the ROI is. We think it's important. We don't want to miss out. Versus, you know, what I'm spending on print or what I'm spending on TV, or what I'm spending on kind of traditional campaigns. How are marketers looking at that within their portfolio? >> It is a great questions, and I think that marketers know that they need to invest in influencer marketing, so we're seeing an influx of investment coming in through influencer marketing. That said, I've been in a lot of conversations with brands that are talking about, do we go the macro influencer route or do we go with the micro influencer route? And right now I think that brands are starting to realize that if you get a lot of voices or a number of voices that are sharing the same sentiment and that are able to feed off of each other with respect to the conversation and amplify each other because even if you have micro influencers with smaller following count, they're going to amplify each other's content, and that ends up in the long run, as we talked about, being more authentic. So that's where a lot of the conversations are going right now in terms of how to spend that influencer marketing budget and weighing the pros and cons of those different options. >> Well, marketing is and should be a science these days. There is so much data about all of us from everything we do every day that brands need to be able to evaluate that, leveraging platforms from Adobe Magento for example, going back to the BECCA Cosmetics and thinking well, if they evaluate these micro influencers and the lift and the traffic that they get, if they're actually using that data appropriately then that should be able to inform how they're actually carving up their investment dollars into which influencers, macro or micro, they know that is going to make the biggest impact on revenue. So it behooves marketing organizations to become scientific and actually use all this consumer data that we are all putting out through our phones, on social devices, constantly. >> Absolutely. I think it's a great point. And I hear often from clients too that they have, they've invested in these platforms that will sort of try to analyze the data, but they're not doing anything with that data. So a lot of e-commerce merchants and retailers, if you don't have a strategy on how you're going to implement that what you're learning from your consumers, then it ends up falling flat. >> What's the biggest surprise you hear from marketers today in terms of this influencer marketing? Are they confused, they're getting it, are there any, I mean you had one really good success story, are there any other, you know, kind of success stories you can share that this is a very different way to get your message into the marketplace? >> You know, one thing that I think people should do more of, that it kind of surprises me that we aren't seeing more of is using media as a channel for e-commerce merchants to have an affiliate strategy. So basically utilizing influencers in collaboration with a media channel to be able to have a new revenue stream. I think that that's something that we haven't seen very often. It's something that when I was working as the CMO for a public trading company called Grey Cloak Technologies, we worked with Sherell's, which is a company that we were acquiring at the time to consult with Marie Claire on how to incorporate influencers into their e-commerce strategy as a publisher. And that's something that I think that people could take more advantage of. >> Even just with affiliate codes or coupon codes and those types of things? They're just not really executing on it that well. >> Right, right. And I think that part of it is a technological component, like the technology isn't quite there to be able to implement, well, to be able to implement that on a wide scale. Like Marie Claire, Sherell's ended up creating the technology for them to be able to incorporate influencers into their e-commerce strategy. But I think that we're going to see more of that. >> Right, because for the influencer, that's one of many sources of revenue that they need to execute on if they're actually going to build, you know, a lifestyle business around being, you know, quote-unquote influencer. They need that affiliate revenue on top of their advertising revenue and all these other little pieces, selling t-shirts, etc. >> Right, right. And we're seeing some companies that are coming to the table to try to provide solutions. One company that I've been watching for a while is called COSIGN, and their platform basically allows influencers to integrate on the platform and link things through social media so that people can buy through a picture, on Facebook for example. So I think we're going to see more of those types of technologies as well. >> Let's talk kind of on the spirit of trends and some of the things that you are seeing. There was this big trend in the last few years of everybody wanting to be able to, we can get anything through Amazon, right? And we can get in a matter of hours. But looking at, and seeing some big box stores that did not do a good job of being able to blend physical, digital, virtual, all these storefronts. What though are you seeing in terms of companies, maybe enterprises, needing to sort of still have or offer a brick and mortar experience? Like we were talking to HP Inc. this morning, he was on stage, and this click and collect program that they launched in APEC where depending on their region, people need to be able to start and actually transact online, but actually fulfill in store. In terms of like, maybe, either reverse engineering online to brick and mortar or hybridizing the two, what are some of the trends that you're seeing that businesses really need to start paying attention to? >> Sure, so I think that omnichannel has been a buzzword for some time, and the way that marketers are looking at omnichannel now, or the way that retailers are looking at omnichannel now is a little bit different. At first, when we started talking about the concept of create this sort of seamless interplay between brick and mortar and online storefronts, it was about taking the brick and mortar experience and putting it online. And now I think marketers are getting better at realizing that those are two completely different channels, and your customer's in a different place in both of those channels. So you need to give them an experience that is relevant for the channel, and it can be totally different than what we're used to in traditional retail stores. But brick and mortar obviously does have a place. We're seeing Amazon come out with their own brick and mortar locations, and we're seeing different e-commerce startups have brick and mortar locations and be very successful with them too as an e-commerce first storefront. So there's definitely a place for brick and mortar. I think people will always have to shop in brick and mortar storefronts, although we obviously are going to get more sophisticated delivery options, and that's coming as well. But I think that it's really an interplay and it's understanding what the channels are and where your consumers are at in that space. >> And then the whole next generation of that, which we're hearing about here, like shopping inside of Instagram. So now as opposed to a destination or I'm going to some place to buy something, whether it's online or a store, now it's actually just part of experiencing the media, as you said, and oh by the way, while I'm here, that looks interesting, I'll take one of those as well. Whole different level of experience that the retailers now have to support. >> Right, absolutely. There are other technology platforms too that, like one of them is basically producing video content that you can scroll over, or let's say you were just watching a commercial on your television, or maybe it's not even a commercial. Maybe it's like real long form content, and if you scroll over a product in the image, you can purchase it out of that video. And so these things are coming as well. It's really an exciting time. But it's an exciting time to be creative as well, because you have to have some creativity behind these strategies in order to make an impression on the consumer. >> It's exciting and creepy at the same time. (Jeff laughing) I don't know if my wallet can handle that. But we'll see. But one of the things I was wondering, when you were talking about, for example, Amazon going, starting as this online mega store and now having brick and mortar stores, the acquisition of Whole Foods. I can't go in there and shop without being asked if I'm a Prime member. But what are some of the sort of foundational customer experience expectations that, because I would think personalization would be kind of a common foundation that whether I'm shopping online with whatever, I want whoever I'm buying from, especially if I have a history, I want them to know what I've bought before, maybe my average order value, to be able to kind of incentivize loyalty. But I probably want the same thing if I'm in a brick and mortar. Are you seeing some sort of key foundations that businesses, whether they do one, the other, or both, need to put in place that can span both? >> Absolutely. So I think it's a great point. I think personalization and the experience. Obviously we're hearing so much about experience in terms of e-commerce, but in brick and mortar stores in particular. But I think that the personalization piece is such an important one. But I also think that it's now getting to where we need to personalize more on the marketing for no matter what channel it is. So you need to bring that physical experience with the customer to your e-commerce efforts as well so that you can, for example, if you're going to email market to me, I want it to be relevant. I want to know that you have been paying attention to my shopping habits, and it's kind of a fine line with respect to data, but if you're going to be using my data, I want to make sure that it's useful to me and it saves me time. >> And it kind of goes back to a point Jeff and I have heard a number of times today, and that's validating me as a consumer that you understand that what I'm interested in that you have to offer, you understand it, it's important to both of us. Well Tina, I wish we had more time to keep talking with you, but we thank you so much for joining us on The Cube this afternoon and talking with us about some of the things that you're seeing, your experiences. And now I know the difference between an influencer, macro and micro, and why they can be so important to brands of any size. So thank you for your time. >> Thank you so much for having me. >> Our pleasure >> Thank you. >> For Jeff Frick, I'm Lisa Martin, you're watching us on The Cube live from Las Vegas at Magento Imagine 2019. Thanks for watching. (upbeat digital music)