>> From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world. This is a CUBE conversation. >> Hi, I'm Stuart Miniman. and welcome to this special CUBE conversation. Always love when we get to talk to founders of companies, when they're drilling into some interesting technologies. I want to welcome a new guest to theCUBE as well as one of our CUBE alumni, sitting right next to me on the screen. First of all, we have Martin Casado, who is a general partner within Andreessen Horowitz. Martin great to see you. >> Its great to be here. >> And you've brought along Mike Del Balso also who is the co founder and CEO of Tecton recently out of stealth going to dig into a lot of the ML discussion. Mike, thanks for joining us. >> Thanks for having me on. Alright, so Martin look, you're no stranger to being a founder yourself, we've loved having you on theCUBE over the years. I have to get since we're getting you on here in 2020, we of course need to start with the fact that there's a global pandemic going on. and I'm curious from our standpoint, from an investment standpoint and looking at technology How does this make it a little bit different in 2020, say than you would've thought coming into the year? >> Yeah, so I think there's kind of a near term answer and a long term answer. I think the near term answer is people don't really understand what the broad impact is going to be. And so companies in the portfolio and the guidance that we do is to be conservative with cash. let's see how Q2 plays out and then let's figure out the right way to kind of operate the company in light of the macro changes. Long term however, it's very clear that every digital transformation project right now is being fast tracked. And as a result we think it's a huge boom to infrastructure. And as who been for the software. Right? like where in the past you could deal with kind of legacy setups that were on print. This is just not the case anymore. So take for a company like Tecton, Mike's company, like there's a lot of conversations that happen now. where the company is like, wow, we really need to have our infrastructure digitized and it all needs to be in the cloud, and all need to be remote and so forth. So we're actually seeing a ton of tailwinds even though there's uncertainty on the macro environment in the near term. >> Yeah. You make some great points, Martin absolutely. The companies that have actually gone through some digital transformation, the goals of that is number one I should be data-driven, number two I should be able to be much more agile. And that's what we need in uncertain times is to be able to react fast and answer it. Mike unfortunately I've talked to plenty of companies, you can't necessarily choose when's the right time to launch a company. When's the right time to do an IPO, trying to time the market. But sorry to say interesting times are upon us. So let's talk a bit about Tecton, give us a little bit of your background the team, the core team I believe coming out of Uber with the Michelangelo project that led to Tecton? >> Yeah. Great. So at Tecton we really focus on what we call operational machine learning, which is really about helping organizations really use machine learning and applied context, really powering customer experiences, powering business processes, things that really make it to production. And so we help these machine learning, AI efforts get past the finish line. And a little bit about the background of me, I used to work at Google as a product manager for the machine learning teams that power the ads auction. So the models that choose which ads to show. and run in real time and are highly productionized. and are really core to the business. And then I was at Uber after that and Uber helped start their first centralized machine learning team. And it was really the whole journey for Uber going from just starting to getting to tens of thousands of models in production. And a big component of that was a lot of the technology that we built there, the platforms and infrastructure that we built to support the different business teams. To be able to embed machine learning and AI products. And so what we're talking about, all these very applied use cases real time, fraud detection, ETA estimation, search pricing. All these things, when you think about with Uber. so through that journey of supporting and helping them get to 100 with machine learning. We built out this platform called Michelangelo, which is really a machine learning platform. It's really an end to end machine learning platform. Learned a lot of lessons as we helped out, dozens of teams. go through the full life cycle, start with starting a project. What is this, what does this mean? What does my business problem, how does it translate to a machine learning problem all the way to having a model in production monitored, and really fully productionized and kind of a growing core to that business. So we learned a lot of lessons from building that at Tecton. My co-founders are the other leaders of that project and we learned a lot of really important lessons that lead to the success of these machine learning projects and we're now focused on helping a lot of other organizations really start up their machine learning efforts and get these things into production. >> Yeah Martin, maybe you could give us a little bit of context here. When I think about repeatability of solutions, how much they scale, there's only so many Google's and Uber's out there. when I look back at the big data world, there wasn't a lot of repeatability, it seemed like everything was custom. What did you see with Tecton? What are you looking at in the ML space that made them such an attractive investment? >> Sure. So maybe let's just pull back and talk about what's going on in systems and infrastructure in general. And I actually think this is probably the biggest shift. Certainly I've seen in my career which is, it used to be, if you looked at a system, let's say a super but whatever system, the correctness of that system. and the performance of that system and the compliance of that system, and the security was dictated by the code that you wrote, right? You wrote bad code you made bugs, you had vulnerabilities in your code that would dictate the system. But more and more that's actually not the case. I mean these days kind of performance, accuracy, security compliance is actually dictated by the data that you feed into. Right? You create these models, you feed the data models, the data gives you output and the data that you feed in and like your work flows around those models who are really dictating things like pricing or things like fraud, these really important things. And unlike code, we don't have the tools to manage data in the same way. And so if you think of it we're moving kind of from this code economy, to this data economy more and more techniques to correct dictates the correctness of all of these systems. and we're talking about trillions of dollars of market cap But if you actually look at the tooling around it, it still feels like the seventies around code, which is like you've got fiefdoms and you've got a lot of tribal knowledge. And so we've been tracking this trend for a long time. We're investors in Databricks We've got a large data portfolio. I mean, it's very obvious if you look at what's happening with the cloud data warehouses, if you think like Redshift, BigQuery and Snowflake. The world is going data extracting information out of data. And so on the backdrop of that, we're like okay, you need to be able to think of data like you think of code. and have the tooling around it that helped makes the lives of people working with this stuff simpler, especially for the core use cases which is ML and AI. And to that end I think that this is broadly known in the industry but like looking in the leading companies is like a crystal ball into the future, right? Because they tackle a lot of the problems before the rest of the industry did. And Michelangelo was very well know as the leading project in this. It had a broad set of respect from the community and kind of created this notion of a feature store which has now been replicated. And so really this is like the preeminent project in one of the biggest macro transformations. Beyond that, we met the team that are fantastic. We've got great chemistry, we've got a lot of similar backgrounds. And so the investment was pretty straight forward from that. But I do think it's important to frame it in the context of this macro shift that's going on. >> Yeah. it can't be overstated how important data is. I do think we need a new analogy probably with what happened with the global pandemic. Everybody was talking about data being the new oil and oil is pretty deep right now. And data is definitely not losing its value. Mike, when I read some of the discussion about Tecton enables data scientists turn raw data into production ready features and predictive singles as signals it sounds really impressive. So help us understand kind of the core thing that you do and where we are in the product life cycle. >> Great. Well so a machine learning application there's fundamentally two components. Right? There's a model that you have to build that's going to make the decisions, given a certain set of inputs. And then there's the features which ended up being those inputs. that the model uses making decision. common machine learning infrastructure stats, really are split into two layers. There's a model management layer and a feature management layer. And that's an emerging pattern in some of the more sophisticated machine learning. stacks that are out there. And what we build at Michelangelo we really had this model management layer, this feature management layer, and we recognize that that feature management layer was the thing that really allowed us to go from not just zero to one, but one to end and scale out machine learning across a number of different used cases and allow individual data scientists to own more than just one model in production. And so really what's at the core of that is a few components. The first is just feature pipelines. So these are data pipelines that plug into the businesses raw data via batch streaming, real time data and turn those into features that are these predictive signals and models consume. The second part of that is a feature store, which catalogs these feature transformations, catalog these pipelines and draws, the output raw data or the output feature data. And then the third component is feature service. Making those features accessible to a data scientist when they're building their models. And to the models in the production environment so they can make these decisions sometimes needed in milliseconds for real time decisioning that is quite common. and a lot of high value machine learning applications. what Tecton really is, it's a data platform for machine learning that manages all the feature data and feature transformations that allow an organization to share the predictive signals. These features across use cases in reading catalog needs and understand what they are. And secondly get these into production so they don't get hung up in that final stage right before they're trying to cross the finish line with the machine learning project. >> Stuart: All right. And Mike the product today, my understanding of private beta. You do have some customers at that point, tell us a little bit about that. >> Yeah, we're at private beta with a number of customers. We just went into full production with it last month. A couple of other customers that I maybe shouldn't name on the air, but we are spending time engaging in kind of like deep hands-on engagements. with different teams who are really trying to set up their machine learning on the cloud. Figuring out how to get their machine learning in production. And it tends to be teams that are trying to really use machine learning for operational use cases. Really trying to drive real business decisions and power their product customer experiences. And not as much as a lot of the kind of like research algorithm research stuff, but we're really just trying to solve these core data problems that are preventing machine learning projects from being successful. >> Yeah. And it was interesting Martin. I was listening to some of what Mike was saying I'm like, okay. It's not quite the analogy of micro-segmentation. or separating the control plane or the network plane and networking, but there were some analogies there. What I want to ask you though is the role of data? I talked to Andy Jassy a couple of years ago. I asked him the flywheel for AWS for years was customers. How many customers they could get and I was wondering does data become that new flywheel? And there's the center of gravity's and the customers that can happen and monetize with going there. So I'm just curious your thoughts on that. >> So I think people don't appreciate how different data is than code. And so I just want to start there because I think it's really germane to this topic. So listen code is like a finite state. Right? It's like, it's lines of code. You can build it, you can modularize it, It's like building a house. And so the tools that you put around code kind of reign in, what's already a fairly low entropy system, like a fairly orderly system. Data On the other hand, data is like the natural world. It's all of the complexity of the universe. Right? It's the behavior of humans. It's temperature readings and there's so much more complexity. and there's so much more entropy in data that the way that you deal with it is so fundamentally different than you have to deal with code. And so we've all of these and so I wanted to start that with we've heard all of these analogies about data, data is the new oil data is for the value, et cetera, et cetera, et cetera. But a lot of it's tautological, meaning yes, of course there's value in data. Yeah. Yes. If you have proprietary access to data, you've got proprietary access to data. But what we don't really know is how do you take data and reign it in? So you can use it in the same way that you use software system. We actually don't even know how to do that and so talking about things like data network effects and extracting data is a little bit preliminary because we still actually don't even understand, like how much work it takes to mine insights from data. What I do know you need, I do know you need the tools to do it and I do know that those tools are quite different. and so I think that we're now in this era building the tooling that is required to extract the insights of that data. And I think that's a very necessary step and this is where a Tecton comes in, to provide that tooling. And I think once we have a better handle on that then we can start asking these deeper questions, which I think are great questions. But the things like how defensible is data? Do you have network effects of the data? can you put in a finite amount of effort and extract signal at all times? Like how messy is data, et cetera. So I think that's kind of where we are in this journey, which is exactly why you need companies like Tecton to help answer. >> Alright. So Mike there's been the promise of really unlocking data now. There has been a really interesting discussion point for the last five or 10 years. The company is named Tecton, I've read some of the blog posts and talk about the Cambrian explosion and changes there. So give us if we're looking forward, you've just come out of stealth. What is success for Tecton two to three years out from now? >> Yeah, I think the biggest thing is we're trying to help organizations. Recognize that their data really is an asset and treat their features like assets. And when we can get to a point where organizations that teams that want to use machine learning and production don't need to throw a million data engineers at a problem. And we get added to a point where machine learning is not, a special team of experts that are super expensive that you kind of leave in the corner of your building and hope they come back 18 months later with some project that is showing some value, that would be success for us. we really are dead focused on the problems that are preventing these projects just from getting into production. And when we see the industry as a whole have seen success with these machine learning projects, I think we will have our mission accomplished. >> All right, Martin, I'll give you the final word to the opportunity you see in front of Tecton. >> I honestly think the data industry is going to be 10 X the computer industry. I just think like with compute you're building houses from the ground up and there's a ton of value there. I think with data is you're extracting insight and value from the universe, right? It's like the natural system. And every company has data and lots of data and all of it has some information. And so I think that this is a chance to be a very, very pivotal company. in democratizing access to data. So I think that the opportunity is enormous. >> Well, Martin, thank you for joining us again on the update, Mike, thank you Welcome to being a CUBE alum. Definitely hope to have you back soon to track the journey, congrats on step one out the door and best of luck going forward. >> Thank you. >> That's great. Thanks too >> All right. Be sure to check out the cube.net. for the upcoming events that we have today they're all virtual, but the interviews are all there as well as all the archive. I'm Stuart Miniman and thank you for watching theCUBE. (soft upbeat music)

>> Narrator: Live from Santa Clara, California, it's The Cube. Covering Open Networking Summit 2017. Brought you to by the Linux Foundation. >> Hey, welcome back everybody. Jeff Frick here with The Cube, along with Scott Raynovich. We're at the Open Networking Summit 2017. Linux Foundation has taken over this show a couple years ago, it's a lot of excitement. A lot of people would say that the networking was kind of the last piece of the puzzle to get software defined, to get open. We're really excited to kick off the show with a really great representative of SDN and everything that it represents. Martin Casado, now with Andreessen Horowitz, Martin, great to see you. >> Hey, I'm super happy to be here. >> So, coming off your keynote, you said it was ten years ago almost to the day that you guys started the adventure called Nicira, which kind of put us where we are now. >> You know, you and I are growing old together here. It has been a decade. I've actually been on The Cube throughout, so I'm very happy to be here. Thanks so much for the intro. >> Absolutely. So, what were your takeaways, Scott, on that keynote? >> It was great, we had some great stuff this morning. Not only was Martin giving the history of Nicira and the origins of SDN and talking about how you made it successful after all these challenges but we also had AT&T unveiling a new incredible white box program, where they're running open networking on their entire network now, so, it was kind of a, I thought, a big day in general to show how far we've gone, right? And you talked a little about that. >> Yeah, listen having come over here since the inception of ONS, what strikes me is, it originally, it was so speculative, it was kind of like wouldn't it be nice and you had all these dreamers. It was largely academics or people from the CTO's office and if you compare those first meetings to now, we're in the industry proper now, right? If you come and you look around, there's huge representation from Telcos, from vendors, from customers, and academics. So, I think we've seen a massive maturation in general. >> I just think I could make a mash-up of all the times we've had you on the Cube table where it's coming! We're almost here! >> Martin: And we're like it's here! >> It's here! But now John Donovan said that their goal, I don't know if it's in the short term or the very near term, is to be over 50 percent software defined, so I guess that's a pretty good definition of being here. >> Yeah, I think so. I think that we're seeing, and I think that the AT&T talk was fantastic, but I think you're seeing this across the industry, which is large customers that have been traditionally conservative, have these targets, and they're actually implementing. I mean, it's one thing to have something on the roadmap. And it's one thing to have something planned. It's another thing to actually start seeing it roll out. >> Jeff: Right. >> Again, this is a process. A lot of my talk was like, how long does it take for an industry to mature? But now, there's many things you can point to that are very real, and I think that was one great example of it. >> Well, the other thing I thought was great in your talk is you mapped out the 10 year journey and you said it so discounts often the hardest part which is changing behavior of the market. That is much harder than the technology and some of the other pieces. >> Right, exactly. So, take this from a technologist standpoint. I basically made a career on making fun of hardware. I'm like, software is so much faster than hardware, and hardware is so slow. But now if I stand back and take a long view, yeah, fine hardware's slower than software, but it's nothing compared to changing organizational behavior or consumer behavior and so, for me it was actually pretty humbling going through this last decade, because you realize that even if you have product market fit, and even if you have a good technical solution, there is a natural law of market physics that you have to overcome a moment of inertia that takes probably a decade, certainly five or six years. >> And that's before things like vendor viability, when you're trying to enter the enterprise space, or legacy infrastructure which is just not getting ripped out, you know? So many hurdles. >> Strictly consumer behavior, right? Consumers are used to doing one thing. I always talk to new entrepreneurs and I say the following: You have two jobs as an entrepreneur. Job number one is you identify a constituency. That constituency wakes up, they think about everything in the world, but they don't think about your thing, so job number one is to get them to think about your thing. That's difficult. It's like Inception. It's like Leonardo DiCaprio Inception. You're putting an idea in somebody's head and then the second thing that you have to do is you have to attach a value to that. So, just because they have the idea doesn't mean that they actually value it. So, you actually have to say, listen, this is worth X amount of dollars. And it turns out that this takes a long time and that's why market category creation is such an effort. That's why it's so neat, we're standing here and we're seeing that this has actually happened, which is fantastic. >> You talked about Nicira, which today, correct me if I'm wrong, it's still the biggest success story in SDN in terms of a startup, you know, 1.3 billion. You talked about different iterations, I think you said, six or seven product iterations and being frustrated at many levels. Did you ever sit there one day and think, "uh, we're going to fail." >> Martin: (laughs) >> Was failure a common- >> Oh man, I don't think there wasn't a quarter when we're like "we're dead." (laughs) By the way, that's every startup. I mean, I'm on- >> Scott: That's just normal, right? >> There's six or seven boards right now, I mean every startup has this oscillator. When we started at Nicira, it was in 2007. And in 2008, the nuclear winter set in, if you remember. The whole economy collapsed, and I think that alone could've killed us. So absolutely, and all startups who do that. But one thing that I never lost faith in was that the problem was real. I wasn't sure we had the right solution or the right approach, and we iterated on that, but I knew there was a real problem here. And when that is kind of a guiding star and a guiding light, we just kept going towards that. I think that's why ultimately we ended up solving the problem we set out to, it was just we took a very crooked path to get there. >> What was the feedback mechanism? Was it like just talking to as many customers as possible or? You talked about the market fit versus the industry fit, how did you gather that information? >> I think in core technical infrastructure, the strategic leaders of a startup have to be piped into the nervous system of both the technology trends and the product market fit. Technology trends because, technology trends provide the momentum for what's going to get adopted and what it looks like. And the product market fit is what is the customer problems that need to be solved. And so I think it's really critical to be deeply into both of those things, which is why things like ONS are so important, because they do kind of find a convergence of both of that. What do customers need but also where's the technology going. >> And it's really neat, that's kind of like the platform versus the application. You're going down the new platform strategy, right? Which is the software-defined networking, but at the end of the day, people buy solutions to their problems that they need to get fixed today. No one's buying a new platform today. >> Yeah, so there's two issues, you're right. There's the technical directions and then the specific applications for that, and one thing I talked about and I really believe is we focus a little bit too much on the technology platform, how those are shifting, early on and less on what the customers need. I don't think you want to 100% flip that, you need to focus on both, but I think that they both should be even-handed. What do customers need and then what is the right technical approach to get there. >> And you also stuck on a couple of really interesting points about decisions. You're going to make a lot mistakes going down the road. But you said, you got to make two or three really good ones and that will make up for a whole lot of little missteps along the path. >> So in retrospect, and this was actually a big a-ha! for me and maybe it's obvious to other people, but this was a big a-ha! to me, even as I was putting together this talk. So, the way venture capital works is you make a lot of bets, but only one in ten will actually produce returns, so you're kind of swinging for the fences and almost all the returns comes from the Googles and the Facebooks and the Ubers and so forth. That's just how it is. Now, as a venture capitalist, you can have a portfolio, you can place ten of those bets in parallel. Going back through all of the slides and everything we've done, I hadn't realized before how similar doing a startup is, which is you make a lot of mistakes in startups, but a few key decisions really drive the strategy. Does that make sense? I always thought maybe you need to do 50/50, or maybe even 80/20, 80% correct and 20 wrong, but it's not that. There's a few key decisions that make it correct, and so the key is you're straddling these two pieces of human nature. On one side, you want to stick with something, you want to make sure that you're not sticking too long with something that isn't going to work, and then the other side you don't want to get rid of something before it's going to work. You want to be both honest with yourself when it's not working and you want to be patient. And if you do that long enough I think that you will find one of the critical decisions to drive the startup forward. >> Yeah, one interesting thing you said, you arrived at a conclusion that the products and individual applications were more important than the platform, and that kind of runs contrary to the meme that you have now where the Harvard Business Review is saying "build a platform, build the next Airbnb." And what you're saying is kind of contrary to that. >> Right, so I went into this with a path from Mindframe, if you look at our original slide deck, which I showed, it was a platform. Now, I think that there's two aspects for this, I think in SDN specifically, there is a reason technically why a platform doesn't work, and the reason for that is networking is about distributed state management, which is very specific to applications. So it's hard for a platform to register that, so technically, I think there's reason for that. From a startup perspective, customers don't buy platforms, customers buy products. I think if you focus on the product, you build a viable business, and then for stickiness you turn that into a platform. But most customers don't know what to do with a platform because that's still a value-add. Products before platforms, I think, is a pretty good adage to live by. >> But design your product with a platform point of view. That way so you can make that switch when that day comes and now you're just adding applications, applications. So, I want to shift gears a little bit just kind of about open source and ONS specifically. We hear time and time again about how open source is such an unbelievable driver of innovation. Think of how your story might have changed if there wasn't, and maybe there was, I wasn't there, something here and how does an open source foundation help drive the faster growth of this space? >> So, I actually think, and I'm probably in the minority of this, but I've always thought that open source does not tend to innovation. That's not like the value of open source is innovation. If you look at most successful open source projects, traditionally they've actually entered mature markets. Linux entered Unix, which is, so I'd say the innovation was Unix not Linux. I would say, Android went into Palm, and Blackberry, and iPhone. I would say MySQL went into Oracle. And so, I think the power and beauty of open source is more on the proliferation of technology and more on the customer adoption, and less on the innovation. But what it's doing is it's driving probably the biggest shift in buying that we've ever seen in IT. So, IT is a 4 trillion dollar market that's this massive market, and right now, in order to sell something, you pretty much have to make it open source or offer it as a service. And the people that buy open source, they do it very different than you traditionally do it. It allows them to get educated on it, it allows them to use it, they get a community as part of it. And that shift from a traditional direct vendor model to that model means a lot of new entrants can come in and offer new things. And so, I think it's very important to have open source, I think it's changing the way people buy things, I think building communities like this is a very critical thing to do, but I do think it's more about go-to-market and actually less about innovation. >> So what does it mean for all these proprietary networking vendors? I mean, are they dead now? >> No, here's actually another really interesting thing, which is I think customers these days like to buy things open source or as a service. Those are the two consumption models. Now, for shipping software, I think shipping closed source software, I think those days are over or they're coming to the end. Like, that's done. But, customers will view, whether it's on-prem or off-prem, an appliance as a service. So, let's say I create MartinHub. So, it's my online service, MartinHub, people like MartinHub. I can sell them that on-premise. Now, MartinHub could be totally closed source, right? Like, Amazon is totally closed source, right? But people still consume it. Because it's a service, they think it's open. And if they want something on-prem, I can deploy that and they still consume it as a service. So, I think the proprietary vendors need to move from shipping closed source software to offering a service, but I think that service can just be on-prem. And I think prem senior shift happens, so I don't think there's going to be like a massive changing of the guard. I do think we're going to see new entrants. I think we're going to see a shift in the market share, but this isn't like a thermonuclear detonation that's going to kill the dinosaurs. (laughs) >> I want to get your take, Martin, on the next big wave that we're seeing which is 5G, and really 5G as an enabler for IoT. So, you've been playing in this space for a while. As you see this next thing getting ready to crest, what are some of your thoughts, also sitting in a VC chair, you probably see all kinds of people looking to take advantage of this thing. >> That's funny. I'm actually going to answer a different question. (laughs) Which is, I-- >> Scott: That's cause 5G doesn't exist yet, right? >> No, I love the question, but it's like, this is really a space that's really near and dear to my heart, which is cellular. And I've actually started looking at it personally, and even in the United States alone, there are something like 20 million people that are under-connected. And I think the only practical way to connect them is to use cellular. And so I've been looking at this problem for about a year, I've actually created a non-profit in it that brings cellular connectivity to indigenous communities. Like, Native American tribes, and so forth. >> Jeff: As the ultimate last mile. >> As the ultimate last mile. Which is interesting, like 5G is fantastic, but if you look at the devices available to these people that have coverage, I think LTE is actually sufficient. So what I'm excited about, and I'm sorry about answering a different question, but it's such a critical point, what I'm excited about is, it used to be 150 thousand dollars to set up a cell tower. Using SDN, I can set up an LTE cell tower for about five thousand dollars and I can use existing fiber at schools as backhaul, so I think now we have these viable deployment models that are relatively cheap that we can actually connect the underprivileged with. And I don't think it's about the next new cellular technology, I think it's actually SDN's impact on the existing one. And that's an area of course that's very personal to me. >> All right, love it. It is as you said, it's repackaging stuff in a slightly different way leveraging the technology to do a new solution. >> And it's truly SDN. If you look at this, there's an LTE stack all in software running on proprietary hardware. I'm sorry, on general purpose hardware that's actually being controlled from Amazon. And again, a factor of ten reduction in the price to set up a cell tower. >> Jeff: Awesome. >> What about the opportunity with Internet of Things and connecting the things with networks' artificial intelligence? >> So, as a venture capitalist, when it comes to networking I'm interested in two areas. One area is networking moving from the machine connecting machines to connecting APIs. So, we're moving up a layer. So we've got microservices, now we need a network to connect those and there're different types of end points, and they require different types of connectivity. But I'm also interested in networks moving out. So, it used to be connecting a bunch of machines but now there's all these new problem domains, the Internet is moving out to interact with the physical world. It's driving cars. It's doing manufacturing, it's doing mining, it's doing forestry. As we reach out to these more mature industries, and different deployment environments, we have to rethink the type of networks to build. So, that's definitely an area that I'm looking at from the startup space. >> What kind of activity's there? I mean, you have guys coming in every day pitching new automated connect-the-car software. >> I think for me it's the most exciting time in IT, right? It's like, the last, say ten fifteen years of the Internet has been the World Wide Web. Which is kind of information processing, it's information in, information out. But because of recent advances in sensors due to the cellphone, the ubiquity of cellphones, the recent advances in AI, the recent advances in robotics, that Internet is now growing hands and eyes and ears. And it's manipulating the physical world. Any industry that's out there, whether it's driving, whether it's farming, is now being automated, so we see all the above. People are coming in, they're changing the way we eat food, they're changing the way we drive cars, they're changing the way we fly airplanes. So, it's almost like IT is the new control layer for the world. >> All right, Martin, thanks again for stopping by. Unfortunately we got to leave it there, we could go all day I'm sure. I'll come up with more good questions for you. >> All right, I really appreciate you taking the time. It's good to see both of you. Thanks very much. >> Absolutely, all right, he's Martin Casado from Andreessen Horowitz. I'm Jeff Frick, along with Scott Raynovich. You're watching The Cube from Open Networking Summit 2017. We'll be back after this short break. Thanks for watching. (mellow music) >> Announcer: Robert Herjavec. >> Man: People obviously know you from Shark Tank, but the Herjavec group has been really laser fo--

okay we're back at vmworld twenty twelve i'm john fairy with SiliconANGLE calm this is the cube this is our flagship telecast we go out to the events extract a signal from the noise and share that with you i'm joe and stu miniman my co-host with this segment and martine casado the co-founder of nicera you guys are ranking number one on our trending tool that we built under networking because it moved up to the top of the list because of vmworld company had spent a billion dollars for you guys jaishree from Arista called you guys the Instagram of networking kind of tongue-in-cheek on the huge buyout but hey congratulations great wired story today SR with you guys we've done about the talent you have and you brought over the vmworld and you're the top story here so congratulations thank you welcome to the cube thank you so take us through the logic and your motion around past year okay up until the buyout what a roller coaster so just share with us personally from Europe as an entrepreneur what was it like what highlights of what happened well I guess I've been very focused on changing networking right so for me it's been largely a technical ride and since we started the company five years ago we've been focusing on developing core technology and we did that for the first three years and then the last year to us was primarily about execution and customer engagement and so you know we've spent a lot of time proving the technology getting into production doing the support and fixing out that model and so it turned out is a very natural transition point when the acquisition happened because we had gotten traction we had starting to realize how difficult it is to address a market as large as this within a small start-up and so it was very welcome to come join a much larger company where we can kind of provide this as a much box so you guys have some big backers obviously you know they're all it's all well documented in the valley but every entrepreneur has that moments like wait a minute is this what I wanted is this tea but the dollars was so good and vmware's asti growing company what clicked for you what made you go is this the right thing take us through that decision you know absolutely so I mean like to me business guides behavior and at the end of the day the goal is is how do you change networking and have a very very firm belief that the access layer to that network is moving from within the network towards the edge and so we wanted to develop technologies that can use this position to re-implement networking and software and so once you get the core technology done once you prove it out with large customers once you prove out the market the question is is kind of what is the best way to have the biggest impact and I think in some respects you can look at vmware is one of the largest networking companies in the in the world just based on port count right the number of virtual ports that they control is as large as any large networking vendor so this is the opportunity of a lifetime to change in industry so like I've been doing this now you know sdn since those doing my PhD at stanford for so going on 10 years now and this is the the opportunity of a lifetime to actually have broad broad like planet scale impact well congratulations certainly you disrupted the market not only in the validation of the acquisition but as you guys were moving out and talking about some of the deployments you guys were doing it just came out of left field for most people but in the inside baseball sure people knew it was going on in terms of like how you guys are disrupting so so congratulations thank you here I want to talk about is also the messaging here at vmworld very solid around suffered to find datacenter sure and that really kind of brings you into a whole nother beyond networking so you know we've been covering converged infrastructure that's looking a look upon you know around house storage servers and networking so its bigger now than just networking right so now you're taking it to a whole nother leg of the journey so connect the dots out there for the folks between software virtualization and software-defined networking to this to the data center help them understand what is going to happen under that next leg of the journey yeah of course so we're all familiar with compute virtualization right I mean this is how vmware initially changed the world where the time it takes to provision a workload when from weeks to literally minutes like two minutes however I t isn't about single workloads ideas about applications and all the network services that those applications require for example firewalling or security or or monitoring debugging and so even though we reduce the time it took to provisional workload from weeks two minutes you still took days to do everything else that was required so if we take a broad scope if we take a broad look at a thai tea we still realize it still takes days to provision new applications and to provision new workloads and so the only way to get past this the next step that we want to take is to virtualize every aspect of infrastructure and so there's three of those there's there's compute which is virtualized their storage which we're making good progress on and there's network and network really is a pivot piece right it's the one piece that touches everything right it is between the compute in the storage it is between the different types of compute and so if you look at large data centers even cloud data centers the long pole in the tent and provisioning is the network so we must must virtualize that so the goal is the software-defined data center that's like everything's in software everything's totally dynamic you create it on demand you can move it its liquid it's like water it'll go anywhere but in order for this dream to be realized we've got to get the network out of the way and that's what the sierra does we've been talking about going to go and Wikibon we've just kicked up a whole kind of research section on what we're calling data infrastructure and really highlighting this modern era right and we kind of use a lot of sports analogies but you know a modern era meaning the new way not the old way right so you're a classic example of disruption in a new way so talk about the enablement that you see happening from a from a marker play standpoint just you know open your mind and share the crowds and vision around what you will enable with this because networking is has to be dynamic it has that makes total sense you guys have done it what's going to happen next in your mind's eye in terms of what the possibilities are yeah yeah absolutely so I think ultimately this is where we want to get to we want to build a platform that will provide that will recreate you know every Network Service and functionality in a virtualized manner in software from the edge and that means that there can be any service available anywhere over any type of hardware at any scale that's needed and it can be done all at virtualization timeframe so this is like you do an API call you get a virtual network abstraction you add a firewall to it you you configure ackles to it and so all of network configuration all of network services all of network operations become soft state it becomes like a VM image and it's available anywhere that you want it to and so that is the first step so I believe these transformations and systems and this happened many times in the past happen in two steps the first one is you virtualize and when you virtualize you offer the same thing but in a more flexible manner like when you virtualize compute you offered an x86 cpu but you did it in software after you virtualize you can actually change the operational paradigm like when you when they created compute virtualization they didn't immediately get to migration or snapshot or rewind all these other kind of operational benefits these came later so the first step is any networking anywhere you want at any scale automatically and then the second step is like drastically changing the operational paradigm so you can do things like better security so you can rewind configuration state I mean things that we can't even think about today because now we have this ultimate point of indirection that's virtualized this virtualized layer and who's the candidate for these developers just admins net admins all the above is it going to be software programmatic I mean how does that it takes DevOps right to a level of functionality that is just mind-boggling so yeah who's the new personnel yeah it was like who's life does this impact think what happens called a CI easy out there well I mean it's a good question whose life does this impact I mean I mean immediately anybody that's building out a data center like a cloud architect is going to have this this primitive that that they can use to architect better system just like you gave them a virtual machine they use that as a primitive for building better data centers now we're giving them virtual networks as a primitive build virtual data centers so the cloud architects job gets easier application developers don't have to worry about the basics of you know the way networks work our network configuration operations will have a lot more flexibility and the virtual layer of where they can move things around as far as the physical networking layer the problem actually becomes quite a bit simpler but you still have to focus the on the problem of building a physical network so for example when server virtualization came around you didn't like reduce the need for servers you needed more servers and just like the same thing will happen with with network virtualization which is you'll still need physical networks and they're going to probably have to be better physical networks but the problem now is more of how do you build a physical network with high capacity that can support any workload and less about doing all the operational stuff you do today how does an impact we just had chris hoffman from juniper who's now a worker he's been a big security buff a great guest for us but we just were just riffing on the security problems right so give us your perspective on how this new canvas of software-defined virtualization is gonna impact security paradise yeah so I mean I think there are a couple of answers i actually think ultimately the security model is improved honestly so yeah the original work was done with the intelligence community actually the the original funding for nasira came from the intelligence community my background I used to work for the intelligence agencies and when you move everything to software we already have a fundamental security paradigm which is crust consolidation in the hypervisor right and with network virtualization you follow the same paradigm which is you you entrust the hypervisor to enforce things like isolation enforce the security but now you've got a strongly authenticated endpoint there you're not guessing about things but but it requires the security community to evolve with the virtualization community so I think that there's much more of a socialization hurdle more of a social hurdle than a technical hurdle like all of the technology is there to do good security in the cloud I think getting the traditional vendors to evolve their tools into of all they're thinking it's much more difficult so I've got one more thing to add I actually think there's an opportunity to do security in entirely new ways ones that again can transform the industry so for example with virtualization you've got deep semantics into the workloads I mean you're in the hypervisor you can look inside the VMS you know who's using them know what applications they're using guy you could even know what the documents are being sent or or read or passed around and because you have this information at the edge if you virtualize the network as well you can pass this context into the network so now instead of like looking at packets and kind of trying to guess what application there is by looking at traffic you can actually get past like the ground truth information from the hypervisor so I think we have the potential so it's like drastically improved security that's Martine if you look at the networking industry there's lots of companies that have tried to change it in the past when you talk about innovation standards have a lot of times slow things down yep you know there's the legacy thought set you know great respect for ccie s but you know they have their install base in their way of doing things so you know there's there's so many pieces that make up networking and even the first time I saw your solution there's multiple standards and open you know groups working on this so you know how do you guys tease through and work through all of these issues yeah so clearly a very complex and multifarious question so I'm going to I'm going to attack one piece of it and we can go from there one of the primary benefits of actual virtualization like actual virtualization is that what you end up with should look like what you started with right so like if you're fundamentally changing an operational paradigm you're probably not doing virtualization so for example in a network virtualization solution the physical network is still a physical Network and it needs to be managed like a physical network with physical networking tools and in order to be fully virtualized the virtual abstraction I give you if I give you a virtual network that should also look like the networks that you've kind of grown to love as a child right they should have all the counters all the debugging the ability to interpose services right and so from from that standpoint you're still preserving the interfaces that people are used to it says there's more of them so like for example when I talk to a network operator today they're like oh this is confusing I've got virtualization I say actually instead of having one network that's really complicated you've got em and simple networks now you've got a very simple physical Network and if you got any virtual networks and they all all of the same interfaces that you use to manage it however there's one catch and that one catch is is there's an additional bit of information which is how do you map this virtual world to the physical world which happened in compute virtualization as well so like everybody understood a virtual machine everybody understood the physical machine but people weren't entirely sure how you debug the mapping between the two and that's incumbent as US is software providers and solution providers to provide that to provide the ability to to map from this kind of you know like platonic virtual reality down to this kind of gritty physical reality okay so from a standard standpoint you I mean you guys helped invent OpenFlow you guys created the open V switch you're heavily involved in OpenStack Andy there's been a lot of buzz since the acquisition about you know the involvement in OpenStack and yeah yeah kind of God how many people today everything in what's your thoughts on it yeah so let me also teach a tease apart you know two things before I get to that one so in networking standards are really important and like in the way standards work he's got a bunch of people that kind of go and talk about things and they design things they agree on them that's actually quite different than open source right and like their different processes different communities different rules of engagement so let me focus on the open source first then we'll go back to the standards thank you because I perfect just to give you a little bit foreshadowing like I hope the world goes open source not open Stan so can we do to it so but we'll get there right so as far as open source yes so I wrote the first version of open flow I mean it came out of my thesis right the first three employees of nicera created the first craft of open flow and it was it was just something that we wanted to use to control switches right i mean we wrote the first reference implementation the first open flow controller you know we seeded the stanford stuff of course i'm a consulting a faculty at stanford so i was involved there we also are the primary developers behind open V switch it's in the linux kernel you know we've probably put you know many millions of dollars in developing that it's used by competitors and partners alike that's used in many clouds and then we've heavily participated in an OpenStack in particular you know where the Delete on quantum which is the networking portion of OpenStack we've done a lot of development bear so as far as the merger is concerned the acquisitions concerned none of that will change we're fully committed to open V switch to OpenStack will continue and even escalate our contribution there quick quick note on OpenStack i was told that something for folks have actually entered some code into the OpenStack of storage just kind of curious about that so and we touched many areas of OpenStack and again the the networking piece touches everything and you know we do a lot of the development on quantum and we run actually nasira internally randa an openstack cloud for internal dev cloud and we've got thousands of VMs on it that we use it and so we're heavily we're like heavy users and contributors to both OpenStack and linux I mean if you look in Linux we've actually fixed a lot of the veal and issues in the kernel right so like and we're very very involved in open source but we're involved as users right like we don't sell you know linux we don't sell OpenStack but we do believe for to have a vibrant ecosystem is nice to have these tools out there and as we use the tools we fix them and we contribute it back okay what about multi hypervisor environments because that was one of the things that really impressed me about like the open D switch is it really doesn able kind of that that multi hypervisor even more than kind of heterogeneous switches it's the multi hypervisor piece yeah that's right so if you kind of zoom away like I think we've had like a fairly myopic focus in the industry on servers over the last 10 years and it's like if you zoom away from the server to a data center you end up in this realm of heterogeneous technologies multiple cloud management systems multiple hypervisors and so when we came up with our our initial strategy of building a network virtualization layer we knew networks touch everything we must support all of those technologies and so it was like a fundamental tenant of the technology that we might support all hypervisors and physical hardware switches as well because there are workloads that are not july's and so you know open V switch itself which is the V switch that we use it's in sports in kvm bare metal linux it's been ported to bsd it's been ported to other operating systems it's been ported to top-of-rack hardware switches so we can use all of them to do to do network virtualization so mark can I want to ask you about the sufferer define partnering strategy from a technical perspective obviously we're really big believers in open source as well they love that we'd love to think it's great and it's now a business model in the industry so it's great to see all that work as vmware now with you guys in the family there go to other unifying clouds so they took a multiple clouds at this point so you know what would you bring to the table from hyper Microsoft hyper-v environment and other big vendors HP Dell yeah Microsoft what can you bring to the table in working with those guys or are you outgoing are you talking to them and and if you were having those conversations what does what would those conversations be well so the product itself that we're developing and we we do bring to market now we will continue is a network virtualization platform that's multi hypervisor right and so the goal is to have something that you can deploy into any cloud environment regardless of what CMS are running and regardless of what of what hypervisors they're using now we have many many partners whether their system integrators with the solution partners and so you know we don't have any religion on on the type of technologies in play we want to provide the best virtual networking solution in the industry and that's really our primary our primary focus let me ask you about it Trent some trends in the in the tech community in in academia and the research areas obviously at this example just randomly low-level virtual machines that kind of those kinds of shifts are happening could you talk about just what you're tracking right now that your get your eye on in terms of what's going on at some of the top university obviously low-level virtual machines at the University of Illinois and in Chicago so what other areas can you share with us that you monitoring listen this is a great question to ask a nap academic and I'm going to totally disappoint you in that I you know I i I'm on a lot of pcs and I follow a lot of research I mean you know I submit papers you know all the time and like I've mostly lost faith in the academic process on the research side lately which i haven't relevant so in terms of trends no but that's exactly the point I think that there's enough vision to last for a century and like now it's time to do work and if it were up to me we would all be taking these ideas that we've come up with over the last 10 years there's very few new ones in my opinion and we'd be executing like crazy and so well again while i'm on the pcs and while i do review the papers i do submit the papers i think we should all focus on like changing infrastructure into software executing like hell and changing the world that way and so and I don't have a really bad attitude about this especially as abuse or but it's a bad attitude okay we say it we hit it all hang out so final question for me and if she wants to get one more in and don't you can't say the acquisition as the answer what is the biggest surprise that that that you fell out of your chair over the past 24 months around you in the industry in your entrepreneurial venture here now at VMware and it could be like a surprise and this trend didn't happen that happened that you know these are the things that happened it could be good or bad what's the biggest surprise that caught you off guard this year that's 24 months yeah it's a good question I think the one that actually been a little the most shocking is how how difficult is being just very honest is how difficult to manage perception in the industry and if you look at kind of social media and you look at a lot of the buzz in the rags so much of it is generated by non disinterested parties so invested parties and so I think it's possible to be a perfectly good citizen and then get paint in a very negative light or be a very negative citizen and be painted in a very good light and it's been counterintuitive to me how you manage this effectively like almost a dynamic feedback system so for example this year has been an enormous contributor to open source I think we've contributed more than anybody in our space by you know factor of 10 or more we contributed most of the core technologies and often people like well but it's a proprietary solution on the other hand there sometimes we're like okay this is a closer source product people like we should use this here because it's the open solution and so well I think that definitely felt on both sides you know being both open source and close or sometimes it's worked for us and for the wrong reasons sometimes it's not worked for us for the right reasons and so that dynamic has been the least intuitive to me so I'm not sure I fell off my chair but definitely it's been the most surprising yeah and you know and that's what we're trying to solve a SiliconANGLE as we say we're agile media and ultimately with social media the whole media business is changing so we know one of the things that we care about here so that's why we have the qubits we just this is raw data we want to share be provocative be edgy is too it's a data-driven world and we believe the media business is absolutely screwed up beyond all recognition so so because of just lack of fact-checking just old techniques aren't working and but it's the same game right so it's just so things circulate things get branded and we've seen a time and time again I've seen great people show up as like almost painted as criminals yeah so it's just a sad state of reporting and media so would agree with you there okay John so if I if I can have that one last question your machine you know the networking industries is a big community and when you talk about kind of the jobs that people are doing today what's your recommendation to folks out there in the networking industry what should what should they start to you know we'd or you know start playing with to kind of understand where things are going down the line honestly I don't want to say a cliche but I actually really believe this one I think I think networking networks are evolving to become proper systems and proper systems in an end-to-end manner meaning that goes a very well-defined hardware a software layer they all work together and I think the data center is is becoming a large computer and I think the most important thing is to view the industry and that lens meaning you know I would get as much information as I could on how guys like Google or Amazon or Facebook build their data centers and you realize that if you do a cross-section of these things like the Capital savings the operational savings the flexibility of the software like that's changing the world and if it's not changing the world directly by changing infrastructure it's changing the world to the surfaces they deliver and understanding that model in your bones I think is the beacon going forward so if it were me the first thing I do is I really understand why they make those decisions what the benefits are and I would use that to guide my learning going forward okay Martinez out of this co-founder of this year now at do you have a title at VMware yet or do you I mean did i do I don't know my head honcho of the Sierra am where Thanks coming inside the cube really preciate it we right back with our next guest we're going to wrap up try to wrap up the day as they start to bon jovi soundcheck here at V emerald 2012 this is SiliconANGLE calm and Wikibon doors continues coverage at vmworld great thank you

>>it's mhm Okay, we're here in the cube unpacking the HPD Green Lake announcements, Daniel neumann series Principal analyst and founder of your um research Damn. You're good to see you again, >>Dave always going to jump jump on with you. It's good to have a minute sit down. So >>what's your favorite announcement from from Green Lake? What do you, what do you make of what they announced today? >>Well, I love the opportunity for the company to position itself up against a growth monster like snowflake. I mean looking at the ability to handle the breath of the data at scale and offer a data service that can compete in that space. That's exactly the kind of narrative that I think the markets, the outside world is going to want to hear from HP is how you're not just competing with your traditional, the doubles, the Ciscos, the IBM, you're going after the, the mega growth cloud players and data services. And for me that's really attractive because I've been really on top of hb saying, hey, you're doing a lot of the right things, but people have to feel and see the growth. >>To me this is a major move toward the tam expansion strategy. It's kind of the job of every Ceo right, is to expand the tam. And I'm interested to see how HP e plays this and communicates this because, you know, traditionally it's a hardware company, uh moving into data management Data services. That's an enormous market. We'll talk about how important data is but the data management is just huge. And to do it in a cloud like fashion, how do you see that as potentially expanding the total available market for HP? >>Well, first, let's just almost walking back a second, Dave HP is a cloud player. Okay. And that's the story that it is trying to get out there. It is not a hardware player that's tinkering in software. Hp has done software, this isn't its first go. But if you want to be a cloud player, you look at the big hyper scale as you look at the AWS, as you look at the google, you look at as the google built, not just on hardware, it's built that big C and I've had this conversation before, all the things that make up the cloud, it's the hardware, it's the software, it's the services, the platform, you got to put all these things together. And if HP wants to be a public cloud experience, taking advantage of where we're moving with hybrid and offering it private, it has to have that same subset of services. Look at the investment, whether it's been a W S or google or Azure in data services, HP has to be in this space. So, seeing this come to fruition, in my opinion, is directionally the right path, getting it to be well received, winning the right customers and showing the growth from these investments is going to be the next important phase. >>Do you see that as a service model as being more margin friendly for HP and and if so why? Well, I think >>universally we found there's two major improvements that moving to the as a service. One is, it does over time create expanded operational margin. It's just economies of scale. You can utilize every resource more efficiently. Of course there are Capex expenses, You've seen the amount that hyper skeletons have had to spend to expand their their footprints globally. So there is some Capex upfront but that also on the back end creates the depreciation and different bottom line profit creators. At the same time though, as a service is huge for the multiples and evaluation, which by the way is one of the things that has been a real in focus point for H. P. E. Is how does it up that that number, You know, you look at the snowflakes, not even profitable but getting huge. You know, um, you know, huge multiples on revenue. And then you see even the other hyper scale is all getting bigger plays on revenue and on E. P. S. Most of it has to do with the fact that recurring revenue is beloved by investors, but it's also really sticky and creates a ton of stability within the company for the culture of the business to say, hey, we have customers, they're going to stay with us. They're not going anywhere. They're subscribed to our services. They're buying into what we're doing and by the way, net revenue expansion as you get them sticky, you layer in new services. We've seen how this has worked across the board with public cloud, with software with SAS, can HP do it as well? And of course it's been something they're doing, but it's something we need to watch really closely and I think it's an opportunity that the company needs to lean into it. And I think they will, >>you mentioned snowflake a couple times, there's a there's a, there's a discussion in the industry, it was sort of prompted by martin casado and sarah wang about repatriation and particularly as it relates to software, saas companies uh that the the the cloud bill is so high at some point, they're giving away margin, so they're going to have to come back on prem, I'm not sure that to date that has applied to the general audience of customer, although there's a lot of debate as well between the expensive cloud, obviously, you know, egress charges. So it's hard sometimes to squint through that when you think about HP E bringing Green Lake to market at scale bringing repeatable processes, driving automation, etcetera. How do you think that that cloud repatriation argument, which frankly, I haven't seen a huge cloud repatriation in in the macro, but how do you think that will play out over time, Do you feel like the on prem play can be as cost effective or more cost effective or maybe you feel like it is already today? >>Well, I also listen to the injuries and Horowitz uh, repatriation narrative as well. I think there are economies of scale with cloud that companies have to look at closely. But I also think that has a lot to do with why hybrid has been sort of the story of the day. That's why hyper sailors are going on prem or, and that's why I'm primes are moving to the cloud is because it's always going to be some, you know, some group of different placements of workloads to ultimately get to that optimized result. And so, you know, when you look at, you know, sort of what you asked in my opinion, you know, ultimately it's all about the efficiency of your organization trying to accomplish what your business is. And will there be some repatriation of workloads possibly. But there will be a very important hybrid mix. And I think we're gonna continue to see that trend and I think that's exactly where everyone's going in. Hp is going as well. >>All right, then we've got to leave it there. Thanks so much for your insights, appreciate it. We're gonna definitely have you back you and I are going to do some cool stuff together. So we'll talk next time. Thanks all right, and thank you for watching, this is Dave Volonte for the keeps coverage of H P E Green Lakes announcement, keep it right there. Mm

[Music] hello welcome to this cube conversation i'm john furrier the palo alto studios for the cube i'm your host here with jeremy burton who's the ceo of observe inc just launched their product they launched their company before that they're doing great jeremy great to see you oh no thanks uh always great to be back on yeah there's there's certainly a lot going on the start of my day job which is running observing my night job which is uh obviously working with uh snowflake and it's not great to see both going on at the same time you've done very well with the snowflake relationship being a board member and all and being in that ecosystem and a lot of people are doing well in this shift you're part of it again you're on the inside but also now on the outside building a business and it's exciting because it's highly competitive it's a big category and it's really moving fast so give us a quick update on what's going on in the landscape and your recent launch you just had yeah i mean i i think most businesses be the you know new businesses cloud native businesses as we call it upon in the cloud businesses are old um that they're really uh trying to deliver like new services to reach customers and it's harder for an incumbent business because they've got to do a lot of reinvention or modernization or i guess the term de jure is digitization um and ultimately a lot of that means writing they've got to start writing software again you know it comes naturally maybe to the newer companies uh the sas companies uh but the biggest of the big have got you know really got to start riding software again and and as they push a new code into production every day they've got to make sure it works and so this new market for observability i think really uh helps people troubleshoot problems with this you know these new applications um and the goal obviously is to make sure that you know you avoid customer churn and any kind of a bad experience which um i think is what every sas company dreads um you know it's a big problem you know getting all these metrics in one place is really key i want to get into your launch 2.0 yeah we could bring in dave vellante my co-host was thecube always a favorite to bring on the analysis i know dave dug in heavily on the launch dave good to see you we'll get you hey guys how are you doing how are you doing jeremy good to see you yeah john i mean jeremy your your first launch was was really a company launch right and now now you're given the the product update so what do we need to know yeah so we i mean you're right when we first went out it was sort of like this is observing this is what observability um is we we sort of glossed over a lot of product details because i think like a lot of startups we you know we had a chunk of initial functionality but we knew there was a lot missing and so so previously you know in the last six months since we did that announcement we're now trying to you know fill out the product and a couple of the big features that we knew we needed um i mean one was metrics um and although we've always been able to ingest metrics uh most people maybe know you know time series type data we hadn't built all of the functionality you know in our language or in the user interface for the user to be able to manipulate them um so that was a big lift um which we got done and then and very closely related once you've got metrics the next thing people want to do is they want to start alerting on things hey tell me when this metric is is out of whack and one of our sort of big differentiators are one of the things that we always bring to bear on any kind of data we manage is to link data together so we're always trying to provide more context for the data that the user's looking at so metrics and alerts they sort of tie into our core value prop of being able to relate data jeremy if i don't mind you don't mind ask answering i'd like to get your take on this because one question i ask all these analytics companies is yeah data's great data lakes and it's all good about getting the data in this kind of environment but most people just want to shape the data and they want to just get insights out of it fast they don't want to they don't want to do a lot of prep they want to have it in position whether it's querying it or just having it available and sometimes it's not always there so they're constantly reshaping it and so the idea of just shaping it and making getting some insights which is basically quickly distill out of it turns into i got to reshape i got to go back to the well if you will or the lake in this case and pull out the data how are you guys solving that because this is like the um the simple construct make it easy yeah it's funny i mean even going right back to data warehouse in days of old the big frustration is is etl right it was so painful to transform the data into the right shape to get into the database i mean some of these projects i mean i think like 70 of those projects never even completed um the the big big difference now and certainly a lot of the data we deal with is it's unstructured inherently it's generated by machines we we just sort of dump it all into observe and then we let users pause it on the fly and so it can be one shape one day in a different shape the next and then we'll we'll backfill all of the data automatically into the new shape that the users define so these systems have really got to be set up to do um like ad hoc analysis you know when if you only did a couple of updates to your application uh a year the the environment wasn't that dynamic it didn't change very much and most of the problems you saw you you've seen before and now with code changing every day the application looks different every day so the issues that you see look different every day so it's really really important that these systems are incredibly dynamic and don't get locked into one particular shape from the get-go jeremy you you took a somewhat different approach i mean a lot of companies in this space will choose to do like a purpose-built database specifically for observability and metrics and so forth and that that's talking about a heavy lift that could take take many years you're choosing to put your emphasis do your heavy lift elsewhere yeah that obviously gives you a time to market advantage can you talk a little bit about that philosophy and what that gets you yeah it was probably one of the biggest decisions that we made when we founded observe was was do we build our own database like almost everyone who'd gone before um or do we go with a commercial offering and when we first started building against snowflake three years ago we we did we weren't actually sure it could do what we wanted to do and so it was one of the biggest areas of technical risk um but certainly at this point we've got ourselves very comfortable that it's going to be able to do what we need it to and it saves us building a database and uh i mean like this week at the snowflake summit i think snowflake just announced an additional 30 compression on data it's like okay so we did nothing and now you know all of those folks who are sending terabytes a day to us they get an extra 30 compression and and so that's the value of building on a commercial platform you know snowflake has got 300 engineers working away on on their database and they deliver benefits to us and we focus on the application so we know obviously frank we talk to him all the time and he's unequivocal about your cloud we're not doing a halfway house we're not doing on-prem but you're i'm sure familiar with the uh the a16z narrative from from an uh from from martin casado and sarah wong basically the premise for those of you don't know is you know for startups and as you're growing cloud is a no-brainer but at scale it becomes fifty percent of your cost of revenue it becomes uh an albatross to your operating leverage what do you think about that do you buy that uh do you ever see like a snowflake going going back on prem what's your thoughts on that i mean i feel like yeah i mean we used to put wells in our back gardens and generators in our basement and you know they're cheaper too right but the problem is i've got to dig a freaking well right and and then what am i not doing while i'm digging my well and and so i i don't know i i mean i get the general premise but i don't want half the company going and building not just like a database all of the infrastructure that's underneath why because it's not what our customers pay for like if we can add more value on top of that platform we can charge more so it's sort of like well if all those companies had actually started out building their own infrastructure and everything would they have would they have built the application experience that made them successful i mean you so the the i mean i i get the paper i think it's very very well written i'm just i'm just not sure it's a big distraction like we don't care about the underlying infrastructure we just want it to be there you know and you know and if we were doing that then we might observe might not be as good as it currently is you know well i think it's a question to me john is where's the customer value is the customer value in you know the valuation of the company or is it in what you can deliver and how fast you can hold on let me just put context to martin casado's little thing there it's the paradox um paper so there's a paradox there and his thesis is do you focus on cost of goods sold or do you drive more revenue and his whole part point was at some point you got to look at the cost right and and i then weaved into i hit him up on twitter immediately and i said oh so you must have a bunch of companies who aren't growing right so so because if you look at what's going on the mckinsey paper we covered this at our last startup event startup event is that the companies that are driving new revenue it's coming from a lot of re-platforming and refactoring but also net new use cases so a lot of clients are making more money by introducing new products so so that's a new revenue so you you are either going to be on one side of the paradox you're going to be inside of i'd rather refactor for new revenue yeah then save money by reducing costs so i still think we haven't cleared the runway on this growth so i think there's plenty of trillions left to create so i'm on the side of i'm on the side of you know if you're worried about pennies in the cloud to the well point that jeremy mentioned then you might either look at other things yeah it's about growth i mean i feel certainly younger companies and and observe and i mean also snowflake that we were just talking about i mean uh the snowpack announcement this week of going and running spark jobs well yeah they could do that or they could go build a data center i mean to reduce costs and to me um the right call is to do more with customers data um and and the the i don't know the somewhat um i mean the counterpoint to that would be well let's make it a more profitable business but you know to me that doesn't add up for the majority of new companies jeremy how should we look uh i'm gonna ask how should we think about this space because you have you got guys like splunk that have been doing log analytics for a while now you got you got the elk stack coming in with an open source and you know it's it's open source but it also brings complexity you've got big players now like cisco who's made you know the apple the acquisition of appd you've got kind of who's now a legacy a new relic we talked about purpose-built databases before so everybody's coming at this from all different sides how do you think about it look at it and where do you fit yeah i think you've got the big players i mean you've you've named quite a few of them then and and look most of my career i've i've been on that side right and and typically what you do as a big company is it's harder to innovate and so you use your balance sheet for innovation you go buy innovation and and then you try and integrate and um that that i mean it's very very doable and um but it just takes a long time and the risk is that as you integrate you're never really getting your architecture on a solid foot and you're sort of band-aiding things together and we're selling multiple things to the same customer versus really coming back to first principles and saying well how should this really have been built so i actually tend to worry a little bit less about the bigger companies um and then look there's a set of startups that have from like observed from first principles thought well if we were to build a system to to look at all the telemetry data that applications and infrastructure generate then then how would we do it um so you know we certainly uh banking on the fact that the more modern architecture um as time goes by because i still think we're you know we're in in baseball terms we're probably in the first inning still of observability um that that modern architecture will will come to bear over time we'll be able to do things that the other guys won't be able to do and and one of those is actually the simple task of relating data you know why because all of our data is in one place and it's in a relational database you know it's it's that simple i think one of the things that's worth calling out and it's pointing out is that you guys are also on the snowflake so you you're riding that wave to your point about i which i agree with by the way you're in you're focusing on innovation not kind of moving the deck chairs around on stuff but i want to get a question about this event you had because one of the things that you guys are becoming known for is to eliminate the headaches for sres and devops engineers who have been conditioned to accept you know the old ways of kind of handcrafting and the people who do it first tend to be the most bloody when they when they come out of it but as it becomes easier right and we discovered this at the red hat summit dave and jeremy is that this notion of an sre is becoming more prominent in engineering schools and computer science programs as kind of replacement for it i don't mean like i t is dead but like it's turning into ai ops git ups whatever people want to call it it's cloud native so the notion of an sre is on the teams of these modern development teams so you're seeing this end-to-end workflow visibility so so that means that if they're going to have that they're going to have these new team members sres and dev and sec together and they need the data so this is where you guys are and i think you guys hit this and correct me if i'm wrong if you don't mind explaining how does that the observability equation change when the teams change because teams are changing in the modern architecture yeah i mean it's it's it's probably a cliche but the the you know there's tooling and then this process change and as as as people move to things like continuous delivery um they get maniacally focused on uh delivery of of new features and new capabilities to the customer and then focused on the experience that the customers have in and i think the you know the role of the sre becomes critical because they try and understand not just what the customer is doing with the application but the problems that the customer is experiencing and that's going to work hand in glove you know with the engineering team who ultimately is going to implement the new features that the customers want and one of our sort of big missions here is to is to lessen the burden on the devops team which has been providing essentially infrastructure and tooling for for the sre and engineering teams to use right now they're overwhelmed to deliver just the basics and candidly the engineering and sre teams are not not happy with what's been delivered so we if we can lighten the burden on the devops team you should then get a richer experience for the sre and engineering teams for them to do ultimately what they want to do which is customer satisfaction and and engage their customers uh in in new ways and and there's just the quality of what is surface to those teams right now is just not very good because it's hard so jeremy you mentioned the first innings your uniforms are still white you you got the starting picture how's it how's it feeling how's the arm feel what's the early customer interactions like where are you getting traction yeah it's it's been interesting because um you know when you start with no customers i mean obviously we've been on the wall here at work our first customer 2500 bucks and i've never been so thrilled to get a sales order for twenty five hundred dollars um but no it it it's we we've targeted largely sas companies uh or tech tech centric companies and and one of the guys that we're going to be highlighting is uh topgolf which um i'm sure anyone who's been there and and you know enjoys going and hitting a golf ball around and playing angry birds but um look they're a tech centric company um customer experience for them is everything they're not in the in the it business per se but it enables them to deliver these amazing customer experiences and so you know when they've got issues when they need to troubleshoot problems they need to do it quickly and and so we tend to you know help those kind of companies um improve the experience they're providing um but yeah we've got about 20 paying customers so far um it's it's it's very different actually getting a customer paying you money versus a sort of friend a family member said yeah i'll give that a whirl um you know it certainly should happens the point on the feedback and and really that's what we need right now i mean i think every startup strives to get to what we call market fit which is can we sell this product repeatedly to thousands of customers um i don't think we're quite there yet but we certainly have got the volume of customers and the feedback coming back to engineering that that you know can get we know what to bill put it that way to get us to that point well smart what you do when you're starting with the sas companies the service providers you so you're not you know you're not jumping off the cliff into the enterprise for every custom deal you know get the product market fit and then understand the retention and then expand your tam from there yeah yeah you try and build a solid foundation and you know when you go to the enterprise you're going to need features like role-based access control and more of the manageability capabilities but you know if you were to build all of that out first then you wouldn't know whether you've got a compelling experience for an sre or an engineering team and so what you tend to do is is defer a lot of the management type capabilities try and build compelling features when you see the features are compelling then you sort of build out the supporting infrastructure that allows you to go to bigger companies so it's uh i mean it it the enterprise is what i've always dealt in sort of enterprise software is it's it's not easy um and and my old boss joe tucci had a great saying on this like you know if you're in a hurry take a bit more time and i think that that's sort of our mantra right now we're in a hurry everyone wants to go but like if we don't get the product right it'll it'll bite us later yeah the other expression in the enterprise is everyone makes it all complicated and everything it's all too complicated um which is the enterprise if it's not complicated they make it more complicated right so uh welcome to the edge too now there's every huge there's every edge case you can think of which is why you've got to be careful early on because we we can't afford we don't have time to deal with edge cases we've got to deal with you know what's up the power alley and then once we've got that going then you can start to deal with more of the edge cases yeah we're in the same boat on our end too jeremy i'd like to get uh to end the segment here by giving a quick update and recap of uh the event real quick and what you guys are doing as a company and and what you did at the launch and where your sweet spot is what are you looking for the what's the type of customers that you're looking for right now what is that power alley that you're focused on yeah three to four thousand sas companies in in north america is where we're after um and we tend to help folks on more efficient troubleshooting of applications we help them with tool consolidation um and we help them with security audit and compliance so there if you like the the key use cases that our initial customers have brought us into and um yeah we started off really focusing on on logging and log analytics and then you know yesterday we added to that you know the metrics the time series data analysis um and also the alerting and and we've also got really running in-house the the more apm-like visualizations around tracing so maybe a little bit of a hint at what's coming up later this year yeah i want to get your thoughts too there's been some commentary on twitter like you know we want to get things simpler a little bit more calmer i think there's a comment like it's not the mid we want more of the midwest vibe not so much that the coastal elite silicon valley shiny new toy yeah what's your take on that because it's culturally the shift people want to reduce the tools i mean they got the tool shed of you know every single tool that's been shipped every company comes out is selling a tool don't be the don't be a fool with a tool as the as the expression says no no if we're not careful observability we can define it to be this nichey thing and and you know in silicon valley out here it's probably the worst because there's almost this attitude of well i'm not sure you're smart enough to do observability you're doing it all wrong and our approach i think and i think the market in general wants like they've got issues and our approach needs to be well give show us what you're doing today give us the data that you're generating today we'll make that better and then we'll show you where the blind spots are and so you can have a much more iterative approach to getting to that desired end goal but we've got to stop defining observability as almost this this niche that silicon valley companies uh use i mean i i always joke that we want more of our customers watching netflix not listening to engineers from netflix explain observability yeah david call the flyover enterprise now it's a new category of enterprise yeah i i i i want to encourage people to go check out the the launch it's i presume it's up on your website jeremy so not the typical mumbo jumbo you guys have a lot of fun you started off you're like what and it's it's just it's pretty hilarious and then you know you get into the meat of it but so good job on that yeah thanks yeah we had a local san francisco comedian uh and that helped us out she was awesome i think and i think it's been a software engineer at uh surveymonkey back in the days right right always great stuff jeremy thanks for coming on thecube thanks for the update and uh we'll see you around see you in real life soon very soon great thanks guys always a pleasure to be on okay it's thecube conversation i'm john furrier dave vellante on analysis on this cube conversation segment soon we'll be in real life we'll be at mobile world congress for our first physical event in a long long time first event since 2019 for mobile world congress a lot has changed since that time and we'll be on there for the first hybrid event and then we have two more hybrid events coming up as well adf's reinforced as well as ada's reinvent cube virtual and cube physical all together stay with us thanks for watching [Music] you

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is braking analysis with Dave Vellante. >> Database is the heart of enterprise computing. The market is both exploding and it's evolving. The major force is transforming the space include Cloud and data, of course, but also new workloads, advanced memory and IO capabilities, new processor types, a massive push towards simplicity, new data sharing and governance models, and a spate of venture investment. Snowflake stands out as the gold standard for operational excellence and go to market execution. The company has attracted the attention of customers, investors, and competitors and everyone from entrenched players to upstarts once in the act. Hello everyone and welcome to this week's Wikibon CUBE Insights powered by ETR. In this breaking analysis, we'll share our most current thinking on the database marketplace and dig into Snowflake's execution. Some of its challenges and we'll take a look at how others are making moves to solve customer problems and try to get a piece of the growing database pie. Let's look at some of the factors that are driving market momentum. First, customers want lower license costs. They want simplicity. They want to avoid database sprawl. They want to run anywhere and manage new data types. These needs often are divergent and they pull vendors and technologies in different direction. It's really hard for any one platform to accommodate every customer need. The market is large and it's growing. Gardner has it at around 60 to 65 billion with a CAGR of somewhere around 20% over the next five years. But the market, as we know it is being redefined. Traditionally, databases have served two broad use cases, OLTP or transactions and reporting like data warehouses. But a diversity of workloads and new architectures and innovations have given rise to a number of new types of databases to accommodate all these diverse customer needs. Many billions have been spent over the last several years in venture money and it continues to pour in. Let me just give you some examples. Snowflake prior to its IPO, raised around 1.4 billion. Redis Labs has raised more than 1/2 billion dollars so far, Cockroach Labs, more than 350 million, Couchbase, 250 million, SingleStore formerly MemSQL, 238 million, Yellowbrick Data, 173 million. And if you stretch the definition of database a little bit to including low-code or no-code, Airtable has raised more than 600 million. And that's by no means a complete list. Now, why is all this investment happening? Well, in a large part, it's due to the TAM. The TAM is huge and it's growing and it's being redefined. Just how big is this market? Let's take a look at a chart that we've shown previously. We use this chart to Snowflakes TAM, and it focuses mainly on the analytics piece, but we'll use it here to really underscore the market potential. So the actual database TAM is larger than this, we think. Cloud and Cloud-native technologies have changed the way we think about databases. Virtually 100% of the database players that they're are in the market have pivoted to a Cloud first strategy. And many like Snowflake, they're pretty dogmatic and have a Cloud only strategy. Databases has historically been very difficult to manage, they're really sensitive to latency. So that means they require a lot of tuning. Cloud allows you to throw virtually infinite resources on demand and attack performance problems and scale very quickly, minimizing the complexity and tuning nuances. This idea, this layer of data as a service we think of it as a staple of digital transformation. Is this layer that's forming to support things like data sharing across ecosystems and the ability to build data products or data services. It's a fundamental value proposition of Snowflake and one of the most important aspects of its offering. Snowflake tracks a metric called edges, which are external connections in its data Cloud. And it claims that 15% of its total shared connections are edges and that's growing at 33% quarter on quarter. This notion of data sharing is changing the way people think about data. We use terms like data as an asset. This is the language of the 2010s. We don't share our assets with others, do we? No, we protect them, we secure or them, we even hide them. But we absolutely don't want to share those assets but we do want to share our data. I had a conversation recently with Forrester analyst, Michelle Goetz. And we both agreed we're going to scrub data as an asset from our phrasiology. Increasingly, people are looking at sharing as a way to create, as I said, data products or data services, which can be monetized. This is an underpinning of Zhamak Dehghani's concept of a data mesh, make data discoverable, shareable and securely governed so that we can build data products and data services that can be monetized. This is where the TAM just explodes and the market is redefining. And we think is in the hundreds of billions of dollars. Let's talk a little bit about the diversity of offerings in the marketplace. Again, databases used to be either transactional or analytic. The bottom lines and top lines. And this chart here describe those two but the types of databases, you can see the middle of mushrooms, just looking at this list, blockchain is of course a specialized type of database and it's also finding its way into other database platforms. Oracle is notable here. Document databases that support JSON and graph data stores that assist in visualizing data, inference from multiple different sources. That's is one of the ways in which adtech has taken off and been so effective. Key Value stores, log databases that are purpose-built, machine learning to enhance insights, spatial databases to help build the next generation of products, the next automobile, streaming databases to manage real time data flows and time series databases. We might've missed a few, let us know if you think we have, but this is a kind of pretty comprehensive list that is somewhat mind boggling when you think about it. And these unique requirements, they've spawned tons of innovation and companies. Here's a small subset on this logo slide. And this is by no means an exhaustive list, but you have these companies here which have been around forever like Oracle and IBM and Teradata and Microsoft, these are the kind of the tier one relational databases that have matured over the years. And they've got properties like atomicity, consistency, isolation, durability, what's known as ACID properties, ACID compliance. Some others that you may or may not be familiar with, Yellowbrick Data, we talked about them earlier. It's going after the best price, performance and analytics and optimizing to take advantage of both hybrid installations and the latest hardware innovations. SingleStore, as I said, formerly known as MemSQL is a very high end analytics and transaction database, supports mixed workloads, extremely high speeds. We're talking about trillions of rows per second that could be ingested in query. Couchbase with hybrid transactions and analytics, Redis Labs, open source, no SQL doing very well, as is Cockroach with distributed SQL, MariaDB with its managed MySQL, Mongo and document database has a lot of momentum, EDB, which supports open source Postgres. And if you stretch the definition a bit, Splunk, for log database, why not? ChaosSearch, really interesting startup that leaves data in S-3 and is going after simplifying the ELK stack, New Relic, they have a purpose-built database for application performance management and we probably could have even put Workday in the mix as it developed a specialized database for its apps. Of course, we can't forget about SAP with how not trying to pry customers off of Oracle. And then the big three Cloud players, AWS, Microsoft and Google with extremely large portfolios of database offerings. The spectrum of products in this space is very wide, with you've got AWS, which I think we're up to like 16 database offerings, all the way to Oracle, which has like one database to do everything not withstanding MySQL because it owns MySQL got that through the Sun Acquisition. And it recently, it made some innovations there around the heat wave announcement. But essentially Oracle is investing to make its database, Oracle database run any workload. While AWS takes the approach of the right tool for the right job and really focuses on the primitives for each database. A lot of ways to skin a cat in this enormous and strategic market. So let's take a look at the spending data for the names that make it into the ETR survey. Not everybody we just mentioned will be represented because they may not have quite the market presence of the ends in the survey, but ETR that capture a pretty nice mix of players. So this chart here, it's one of the favorite views that we like to share quite often. It shows the database players across the 1500 respondents in the ETR survey this past quarter and it measures their net score. That's spending momentum and is shown on the vertical axis and market share, which is the pervasiveness in the data set is on the horizontal axis. The Snowflake is notable because it's been hovering around 80% net score since the survey started picking them up. Anything above 40%, that red line there, is considered by us to be elevated. Microsoft and AWS, they also stand out because they have both market presence and they have spending velocity with their platforms. Oracle is very large but it doesn't have the spending momentum in the survey because nearly 30% of Oracle installations are spending less, whereas only 22% are spending more. Now as a caution, this survey doesn't measure dollar spent and Oracle will be skewed toward the big customers with big budgets. So you got to consider that caveat when evaluating this data. IBM is in a similar position although its market share is not keeping up with Oracle's. Google, they've got great tech especially with BigQuery and it has elevated momentum. So not a bad spot to be in although I'm sure it would like to be closer to AWS and Microsoft on the horizontal axis, so it's got some work to do there. And some of the others we mentioned earlier, like MemSQL, Couchbase. As shown MemSQL here, they're now SingleStore. Couchbase, Reddis, Mongo, MariaDB, all very solid scores on the vertical axis. Cloudera just announced that it was selling to private equity and that will hopefully give it some time to invest in this platform and get off the quarterly shot clock. MapR was acquired by HPE and it's part of HPE's Ezmeral platform, their data platform which doesn't yet have the market presence in the survey. Now, something that is interesting in looking at in Snowflakes earnings last quarter, is this laser focused on large customers. This is a hallmark of Frank Slootman and Mike Scarpelli who I know they don't have a playbook but they certainly know how to go whale hunting. So this chart isolates the data that we just showed you to the global 1000. Note that both AWS and Snowflake go up higher on the X-axis meaning large customers are spending at a faster rate for these two companies. The previous chart had an end of 161 for Snowflake, and a 77% net score. This chart shows the global 1000, in the end there for Snowflake is 48 accounts and the net score jumps to 85%. We're not going to show it here but when you isolate the ETR data, nice you can just cut it, when you isolate it on the fortune 1000, the end for Snowflake goes to 59 accounts in the data set and Snowflake jumps another 100 basis points in net score. When you cut the data by the fortune 500, the Snowflake N goes to 40 accounts and the net score jumps another 200 basis points to 88%. And when you isolate on the fortune 100 accounts is only 18 there but it's still 18, their net score jumps to 89%, almost 90%. So it's very strong confirmation that there's a proportional relationship between larger accounts and spending momentum in the ETR data set. So Snowflakes large account strategy appears to be working. And because we think Snowflake is sticky, this probably is a good sign for the future. Now we've been talking about net score, it's a key measure in the ETR data set, so we'd like to just quickly remind you what that is and use Snowflake as an example. This wheel chart shows the components of net score, that lime green is new adoptions. 29% of the customers in the ETR dataset that are new to Snowflake. That's pretty impressive. 50% of the customers are spending more, that's the forest green, 20% are flat, that's the gray, and only 1%, the pink, are spending less. And 0% zero or replacing Snowflake, no defections. What you do here to get net scores, you subtract the red from the green and you get a net score of 78%. Which is pretty sick and has been sick as in good sick and has been steady for many, many quarters. So that's how the net score methodology works. And remember, it typically takes Snowflake customers many months like six to nine months to start consuming it's services at the contracted rate. So those 29% new adoptions, they're not going to kick into high gear until next year, so that bodes well for future revenue. Now, it's worth taking a quick snapshot at Snowflakes most recent quarter, there's plenty of stuff out there that you can you can google and get a summary but let's just do a quick rundown. The company's product revenue run rate is now at 856 million they'll surpass $1 billion on a run rate basis this year. The growth is off the charts very high net revenue retention. We've explained that before with Snowflakes consumption pricing model, they have to account for retention differently than what a SaaS company. Snowflake added 27 net new $1 million accounts in the quarter and claims to have more than a hundred now. It also is just getting its act together overseas. Slootman says he's personally going to spend more time in Europe, given his belief, that the market is huge and they can disrupt it and of course he's from the continent. He was born there and lived there and gross margins expanded, do in a large part to renegotiation of its Cloud costs. Welcome back to that in a moment. Snowflake it's also moving from a product led growth company to one that's more focused on core industries. Interestingly media and entertainment is one of the largest along with financial services and it's several others. To me, this is really interesting because Disney's example that Snowflake often puts in front of its customers as a reference. And it seems to me to be a perfect example of using data and analytics to both target customers and also build so-called data products through data sharing. Snowflake has to grow its ecosystem to live up to its lofty expectations and indications are that large SIS are leaning in big time. Deloitte cross the $100 million in deal flow in the quarter. And the balance sheet's looking good. Thank you very much with $5 billion in cash. The snarks are going to focus on the losses, but this is all about growth. This is a growth story. It's about customer acquisition, it's about adoption, it's about loyalty and it's about lifetime value. Now, as I said at the IPO, and I always say this to young people, don't buy a stock at the IPO. There's probably almost always going to be better buying opportunities ahead. I'm not always right about that, but I often am. Here's a chart of Snowflake's performance since IPO. And I have to say, it's held up pretty well. It's trading above its first day close and as predicted there were better opportunities than day one but if you have to make a call from here. I mean, don't take my stock advice, do your research. Snowflake they're priced to perfection. So any disappointment is going to be met with selling. You saw that the day after they beat their earnings last quarter because their guidance in revenue growth,. Wasn't in the triple digits, it sort of moderated down to the 80% range. And they pointed, they pointed to a new storage compression feature that will lower customer costs and consequently, it's going to lower their revenue. I swear, I think that that before earnings calls, Scarpelli sits back he's okay, what kind of creative way can I introduce the dampen enthusiasm for the guidance. Now I'm not saying lower storage costs will translate into lower revenue for a period of time. But look at dropping storage prices, customers are always going to buy more, that's the way the storage market works. And stuff like did allude to that in all fairness. Let me introduce something that people in Silicon Valley are talking about, and that is the Cloud paradox for SaaS companies. And what is that? I was a clubhouse room with Martin Casado of Andreessen when I first heard about this. He wrote an article with Sarah Wang, calling it to question the merits of SaaS companies sticking with Cloud at scale. Now the basic premise is that for startups in early stages of growth, the Cloud is a no brainer for SaaS companies, but at scale, the cost of Cloud, the Cloud bill approaches 50% of the cost of revenue, it becomes an albatross that stifles operating leverage. Their conclusion ended up saying that as much as perhaps as much as the back of the napkin, they admitted that, but perhaps as much as 1/2 a trillion dollars in market cap is being vacuumed away by the hyperscalers that could go to the SaaS providers as cost savings from repatriation. And that Cloud repatriation is an inevitable path for large SaaS companies at scale. I was particularly interested in this as I had recently put on a post on the Cloud repatriation myth. I think in this instance, there's some merit to their conclusions. But I don't think it necessarily bleeds into traditional enterprise settings. But for SaaS companies, maybe service now has it right running their own data centers or maybe a hybrid approach to hedge bets and save money down the road is prudent. What caught my attention in reading through some of the Snowflake docs, like the S-1 in its most recent 10-K were comments regarding long-term purchase commitments and non-cancelable contracts with Cloud companies. And the companies S-1, for example, there was disclosure of $247 million in purchase commitments over a five plus year period. And the company's latest 10-K report, that same line item jumped to 1.8 billion. Now Snowflake is clearly managing these costs as it alluded to when its earnings call. But one has to wonder, at some point, will Snowflake follow the example of say Dropbox which Andreessen used in his blog and start managing its own IT? Or will it stick with the Cloud and negotiate hard? Snowflake certainly has the leverage. It has to be one of Amazon's best partners and customers even though it competes aggressively with Redshift but on the earnings call, CFO Scarpelli said, that Snowflake was working on a new chip technology to dramatically increase performance. What the heck does that mean? Is this Snowflake is not becoming a hardware company? So I going to have to dig into that a little bit and find out what that it means. I'm guessing, it means that it's taking advantage of ARM-based processes like graviton, which many ISVs ar allowing their software to run on that lower cost platform. Or maybe there's some deep dark in the weeds secret going on inside Snowflake, but I doubt it. We're going to leave all that for there for now and keep following this trend. So it's clear just in summary that Snowflake they're the pace setter in this new exciting world of data but there's plenty of room for others. And they still have a lot to prove. For instance, one customer in ETR, CTO round table express skepticism that Snowflake will live up to its hype because its success is going to lead to more competition from well-established established players. This is a common theme you hear it all the time. It's pretty easy to reach that conclusion. But my guess is this the exact type of narrative that fuels Slootman and sucked him back into this game of Thrones. That's it for now, everybody. Remember, these episodes they're all available as podcasts, wherever you listen. All you got to do is search braking analysis podcast and please subscribe to series. Check out ETR his website at etr.plus. We also publish a full report every week on wikinbon.com and siliconangle.com. You can get in touch with me, Email is David.vellante@siliconangle.com. You can DM me at DVelante on Twitter or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week everybody, be well and we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Last year in 2020 it was good to be in tech and even better to be in the cloud, as organizations had to rely on remote cloud services to keep things running. We believe that tech spending will increase seven to 8% in 2021. But we don't expect investments in cloud computing to sharply attenuate, when workers head back to the office. It's not a zero sum game, and we believe that pent up demand in on-prem data centers will complement those areas of high growth that we saw last year, namely cloud, AI, security, data and automation. Hello everyone, and welcome to this week's Wikibon CUBE Insights powered by ETR. In this breaking analysis we'll provide our take on the latest ETR COVID survey, and share why we think the tech boom will continue, well into the future. So let's take a look at the state of tech spending. Fitch Ratings has upped its outlook for global GDP to 6.1% for January's 5.3% projection. We've always expected tech spending to outperform GDP by at least 100 to 200 basis points, so we think 2021 could see 8% growth for the tech sector. That's a massive swing from last year's,5% contraction, and it's being powered by spending in North America, a return of small businesses, and, the massive fiscal stimulus injection from the U.S led central bank actions. As we'll show you, the ETR survey data suggests that cloud spending is here to stay, and a dollar spent back in the data center doesn't necessarily mean less spending on digital initiatives, generally and cloud specifically. Moreover, we see pent up demand for core on-prem data center infrastructure, especially networking. Now one caveat, is we continue to have concerns for the macro on-prem data storage sector. There are pockets of positivity, for example, pure storage seems to have accelerating momentum. But generally the data suggests the cloud and flash headroom, continue, to pressure spending on storage. Now we don't expect the stock market's current rotation out of tech. We don't expect that that changes the fundamental spending dynamic. We see cloud, AI and ML, RPA, cybersecurity and collaboration investments still hovering above, that 40% net score. Actually cybersecurity is not quite there, but it is a priority area for CIOs. We'll talk about that more later. And we expect that those high growth sectors will stay steady in ETRs April survey along with continued spending on application modernization in the form of containers. Now let me take a moment to comment on the recent action in tech stocks. If you've been following the market, you know that the rate on the 10-year Treasury note has been rising. This is important, because the 10 years of benchmark, and it affects other interest rates. As interest rates rise, high growth tech stocks, they become less attractive. And that's why there's been a rotation, out of the big tech high flyer names of 2020. So why do high growth stocks become less attractive to investors when interest rates rise? Well, it's because investors are betting on the future value of cash flows for these companies, and when interest rates go up, the future values of those cash flows shrink, making the valuations less attractive. Let's take an example. Snowflake is a company with a higher revenue multiple than pretty much any other stock, out there in the tech industry. Revenues at the company are growing more than 100%, last quarter, and they're projected to have a revenue of a billion dollars next year. Now on March 8th, Snowflake was valued at around $80 billion and was trading at roughly 75x forward revenue. Today, toward the middle the end of March. Snowflake is valued at about 50 billion or roughly 45x forward revenue. So lower growth companies that throw off more cash today, become more attractive in a rising rate climate because, the cash they throw off today is more valuable than it was in a low rate environment. The cash is there today versus, a high flying tech company where the cash is coming down the road and doesn't have to be discounted on a net present value basis. So the point is, this is really about math, not about fundamental changes in spending. Now the ETR spending data has shown, consistent upward momentum, and that cycle is continuing, leading to our sanguine outlook for the sector. This chart here shows the progression of CIO expectations on spending over time, relative to previous years. And you can see the steady growth in expectations each quarter, hitting 6% growth in 2021 versus 2020 for the full year. ETR estimates show and they do this with a 95% confidence level, that spending is going to be up between 5.1 to 6.8% this year. We are even more up optimistic accounting for recent upward revisions in GDP. And spending outside the purview of traditional IT, which we think will be a tailwind, due to digital initiatives and shadow tech spending. ETR covers some of that, but it is really a CIO heavy survey. So there's some parts that we think can grow even faster, than ETR survey suggests. Now the positive spending outlook, it's broad based across virtually all industries that ETR tracks. Government spending leads the pack by a wide margin, which probably gives you a little bit of heartburn. I know it does for me, yikes. Healthcare is interesting. Perhaps due to pent up demand, healthcare has been so busy saving lives, that it has some holes to fill. But look at the sectors at 5% or above. Only education really lags notably. Even energy which got crushed last year, showing a nice rebound. Now let's take a look at some of the strategies that organizations have employed during COVID, and see how they've changed. Look, the picture is actually quite positive in our view. This data shows the responses over five survey snapshots, starting in March of 2020. Most people are still working from home that really hasn't changed much. But we're finally seeing some loosening of the travel restrictions imposed last year, is a notable drop in canceled business trips. It's still high, but it's very promising trend. Quick aside, looks like Mobile World Congress is happening in late June in Barcelona. The host of the conference just held a show in Shanghai and 20,000 attendees showed up. theCube is planning to be there in Barcelona along with TelcoDr, Who took over Ericsson's 65,000 square foot space, when Ericsson tapped out of the conference. We are good together we're going to lay out the future of the digital telco, in a hybrid: physical slash virtual event. With the ecosystem of telcos, cloud, 5G and software communities. We're very excited to be at the heart of reinventing the event experience for the coming decade. Okay, back to the data. Hiring freezes, way down. Look at new IT deployments near flat from last quarter, with big uptick from a year ago. Layoffs, trending downward, that's really a positive. Hiring momentum is there. So really positive signs for tech in this data. Now let's take a look at the work from home, survey data. We've been sharing this for several quarters now, remember, the data showed that pre pandemic around 15 to 16% of employees worked remotely. And we had been sharing the CIO is expected that figure to slowly decline from the 70% pandemic levels and come into the spring in the summer, hovering in the 50% range. But then eventually landing in the mid 30s. Now the current survey shows 31%. So, essentially, it's exactly double from the pre COVID levels. It's going to be really interesting to see because across the board organizations are reporting, big increases in productivity as a result of how they've responded to COVID in the remote work practices and the infrastructure that's been put in place. And look, a lot of workers are expecting to stay remote. So we'll see where this actually lands. My personal feelings, the number is going to be higher than the low 30s. Perhaps well into the mid to upper 30s. Now let's take a look at the cloud and on-prem MCS. So were a little bit out on a limb here with a can't have a cake and eat it too scenario. Meaning pent up demand for data center infrastructure on-prem is going to combine with the productivity benefits of cloud in the digital imperative. So that means that technology budgets are going to get a bigger piece of the overall spending pie, relative to other initiatives. At least for the near term. ETR asked respondents about how the return to physical, is going to impact on-prem architectures and applications. You can see 63% of the respondents, had a cloud friendly answer, as shown in the first two bars. Whereas 30% had an on-prem friendly answer, as shown in the next three bars. Now, what stands out, is that only 5% of respondents plan to increase their on-prem spend to above pre COVID levels. Sarbjeet Johal pinged me last night and asked me to jump into a clubhouse session with Martin Casado and the other guys from Andreessen Horowitz. They were having this conversation about the coming cloud backlash. And how cloud native companies are spending so much, too much, in their opinion, on AWS and other clouds. And at some point, as they scale, they're going to have to claw back technology infrastructure on-prem, due to their AWS vague. I don't know. This data, it certainly does not suggest that that is happening today. So the cloud vendors, they keep getting more volume, you would think they're going to have better prices and better economies of scales than we'll see on-prem. And as we pointed out, the repatriation narrative that you hear from many on-prem vendors is kind of dubious. Look, if AWS Azure, and Google can't provide IT infrastructure and better security than I can on-prem, then something is amiss. Now however, they are creating an oligopoly. And if they get too greedy and get hooked on the margin crack, of cloud, they'd better be careful, or they're going to become the next regulated utility? So, it's going to be interesting to see if the Andreessen scenario has (laughs) legs, maybe they have another agenda, maybe a lot of their portfolio companies, have ideas are around doing things to help on-prem? Why are we so optimistic that we'll see a stronger 2021 on-prem spend if the cloud continues to command so much attention? Well, first, because nearly 20% of customers say there will be an uptick in on-prem spending. Second, we saw in 2020, that the big on-prem players, Dell, VMware, Oracle, and SAP in particular, and even IBM made it through, okay. And they've managed to figure out how to work through the crisis. And finally, we think that the lines between on-prem and cloud, and hybrid and cross cloud and edge will blur over the next five years. We've talked about this a lot, that abstraction layer that we see coming, and there's some real value opportunities there. It'll take some time. But we do see there, that the traditional vendors, are going to attack those new opportunities and create value across clouds and hybrid systems and out to the edge. Now, as those demarcation lines become more gray, a hybrid world is emerging that is going to require hardware and software investments that reduce latency and are proximate to users buildings and distributed infrastructure. So we see spending in certain key areas, continuing to be strong across the board, will require connecting on-prem to cloud in edge workloads. Here's where it CIOs see the action, asked to cite the technologies that will get the most attention in the next 12 months. These seven stood out among the rest. No surprise that cyber comes out as top priority, with cloud pretty high as well. But interesting to see the uptick in collaboration in networking. Execs are seeing the importance of collaboration technologies for remote workers. No doubt, there's lots of Microsoft Teams in that bar. But there's some pent up demand it seems for networking, we find that very interesting. Now, just to put this in context, in a spending context. We'll share a graphic from a previous breaking analysis episode. This chart shows the net score or spending momentum on the vertical axis. And the market share or pervasiveness in the ETR data set on the horizontal axis. The big four areas of spend momentum are cloud, ML and AI, containers in RPA. This is from the January survey, we don't expect a big change in the upcoming April data, we'll see. But these four stand out above the 40% line that we've highlighted, which to us is an indicator of elevated momentum. Now, note on the horizontal axis only cloud, cloud is the only sector that enjoys both greater than 60% market share on the x axis, and is above the 40% net score line and the y axis. So even though security is a top priority as we were talking about earlier. It competes with other budget items, still right there certainly on the horizontal axis, but it competes with other initiatives for that spend momentum. Okay, so key takeaways. Seven to 8% tech spending growth expected for 2021. Cloud is leading the charge, it's big and it has spending momentum, so we don't expect a big rotation out of cloud back to on-prem. Now, having said that, we think on-prem will benefit from a return to a post isolation economy. Because of that pent up demand. But we caution we think there are some headwinds, particularly in the storage sector. Rotation away from tech in the stock market is not based on a fundamental change in spending in our view, or demand, rather it's stock market valuation math. So there should be some good buying opportunities for you in the coming months. As money moves out of tech into those value stocks. But the market is very hard to predict. Oh 2020 was easy to make money. All you had to do is buy high growth and momentum tech stocks on dips. 2021 It's not that simple. So you got to do your homework. And as we always like to stress, formulate a thesis and give it time to work for you. Iterate and improve when you feel like it's not working for you. But stay current, and be true to your strategy. Okay, that's it for today. Remember, these episodes are all available as podcasts wherever you listen. So please subscribe. I publish weekly in siliconangle.com and wikibond.com and always appreciate the comments on LinkedIn. You can DM me @dvellante or email me at david.vellante@siliconangle.com. Don't forget to check out etr.plus where all the survey data science actually resides. Some really interesting things that they're about to launch. So do follow that. This is Dave vellante. Thanks for watching theCube Insights powered by ETR. Good health to you, be safe and we'll see you next time.

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty-bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)

(upbeat music) >> Welcome to this special CUBEConversation here in the Palo Alto CUBE studio. I'm John Furrier, the co-host, theCUBE co-founder of SiliconANGLE Media. In theCUBE we're here with Alan Cohen, CUBE alumni, joining us today for a special segment on the future of technology and the impact to society. Always good to get Alan's commentary, he's the Chief Commercial Officer for Illumio, industry veteran, has been through many waves of innovation and now more than ever, this next wave of technology and the democratization of the global world is upon us. We're seeing signals out there like cryptocurrency and blockchain and bitcoin to the disruption of industries from media and entertainment, biotech among others. Technology is not just a corner industry, it's now pervasive and it's having some significant impacts and you're seeing that in the news whether it's Facebook trying to figure out who they are from a data standpoint to across the board every company. Alan, great to see you. >> Always great to be here, I always feel like, I can't tell whether I'm at the big desk at ESPN or I've got the desk chair at CNBC, but that's what it's like being on theCUBE. >> Great to have you on extracting the signal noises, a ton of noise out there, but one of things of the most important stories that we're tracking is, that's becoming very obvious, and you're seeing it everywhere from Meed to all aspects of technology. Is the impact of technology to people in society, okay you're seeing the election, we all know what that is, that's now a front and center in the big global conversation, the Russian's role of hacking, the weaponizing of data, Facebook's taking huge brand hits on that, to emerging startups, and the startup game that we're used to in Silicon Valley is changing. Just the dynamics, I mean cryptocurrency raises billions of dollars but yet (laughs) something like 10, 20% of it's been hacked and stolen. It's a really wild west kind of environment. >> Well it's a very different environment. John, you and I have been in the technology industry certainly for a whole bunch of lines under our eyes over the years have gone there. My friend Tom Friedman has this phrase that he says, "Everybody's connected and nobody's in control," so the difference is that, as you just said, the tech industry is not a separate industry. The tech industry is in every product and service. Cryptocurrency is like, the concept of that money is just code. You know, our products and services are just code, it raises a couple of really core issues. Like for us on the security point of view, if I don't trust people with the products they're selling me, that I feel like they're going to be hacked, including my personal data, so your product now includes my personal information, that's a real problem because that could actually melt down commerce in a real way. Obviously the election is if I don't trust the social systems around it, so I think we're all at an, and I'd like to say world is still kind of like iRobot moment, and if you remember iRobot, it's like, people build all these robots to serve humankind and then one day the robots wake up and they go, "We have our own point of view on how things are going to work" and they take over, and I think whether it's the debate about AI, whether cryptocurrency's good or bad, or more importantly, the products and services I use, which are now all digitally connected to me, whether I trust them or not is an issue that I think everyone in our industry has to take a step back because without that trust, a lot of these systems are going to stop growing. >> Chaos is an opportunity, I think that's been quoted many times, a variety-- >> You sound like Jeff Goldblum in like Jurassic Park, yeah. (laughing) >> So chaos is upon us, but this is an opportunity. The winds are shifting, and that's an opportunity for entrepreneurs. The technology industry has to start working for us but we've got to be mindful of these blind spots and the blind spots are technology for good not necessarily just for profits, so that also is a big story right now. We see things like AI for good, Intel has been doing a lot of work on that area, and you see stars dedicated to societal impact, then young millennials, you see the demographic shift where they want to work on stuff that empowers people and changes society so a whole kind of new generation revolution and kind of hippie moment, if you look at the 60s, what the 60s were, right? >> Well there's people out in the street protesting, right? There were a couple of million women out in the street this weekend, so we are in that kind of moment again, people are not happy with things. >> And I believe this is a signal of a renaissance, a change, a sea change at enormous levels, so I want to get your thoughts on this. As technology goes out in mainstream, certainly from a security standpoint, your business Illumio is in that now where there's not a lot of control, just like you were mentioning before we came on that all the spends happening but no one has more than 4% market share. These are dynamics and this is not just within one vertical. What's your take on this, how do you view this sea change that's upon us, this tech revolution? >> Well, you know, think about it. You and I grew up in the era where clients server took over from main frame, right? So remember there was this big company called IBM and they owned a lot of the industry, and then it blew up for client server and then there were thousands of companies and it consolidated its way down, but when those thousands of new companies, like you didn't know what was going to be Apollo and what was going to be Oracle right? Like you didn't know how that was going to work out, there was a lot of change and a lot of uncertainty. I think now we're seeing this on a scale like that's 10x of this that there's so much innovation and there's so much connectedness going on very rapidly, but no one is in control. In the security market, you know, what's happening in our world is like, people said, okay I have to reestablish control over my data, I've lost that control, and I've lost it for good reasons, meaning I've evolved to the cloud, I've evolved to the app economy, I've done all of these things, and I've lost it for bad reasons because like am I, like I'm not really running my data center the way I should. We're in the beginning of a move in of people kind of reasserting that control, but it's very hard to put the genie back in the bottle because the world itself is so much more dynamic and more distributed. >> It's interesting, I've been studying communities and online communities for over a decade in terms of dynamics. You know, from the infrastructural level, how packets move to a human interaction. It's interesting, you mentioned that we're all connected and no one's in control, but you now see a ground swell of organic self-forming networks where communities are starting to work together. You kind of think about the analog world when we grew up without computers and networks, you kind of knew everyone, you knew your neighbor, you knew who the town loony was, you kind of knew things and people watch each other's kids and parents sat from the porch, let the kid play, that's the way that I grew up, but it was still chaotic but yet somewhat controlled by the group. So I got to ask you, when you see things like cryptocurrency, things like KYC, know your customer, anti money laundering, which is, you know these are policy based things, but we're in a world now where, you know, people don't know who their neighbors are. You're starting to see a dynamic where people are-- >> Put the phone down. >> Asserting themselves to know their neighbor, to know their customer, to have a connected tissue with context and so your trust and reputation become super important. >> Well I think people are really, so like every time there is a shift in technology, there's scary stuff. There's the fuddy-duddy moment where people are saying, "Oh we can't use that," or "I don't know that," and you know, clearly we're in this kind of new kam-ree and explosion of this cloud mobile blah blah blah type of computing thing and ... Blah blah blah is always a good intersection when you don't have a term. Then things form around it, and just as you said, so if you think about 25 years ago, right, people created The WELL and there was community writing first bulletin boards and like now we have Facebook and you go through a couple of generations and for a while, things feel out of control and then it reforms. I personally am an optimist. Ultimately I believe in the inherent goodness of people, but inherent goodness leaves you open and then, you know, could be manipulated, and people figure these things out. Whether it's cryptocurrency or AI, they are really exciting technologies that don't have any ground rules, right? What's going to happen I believe is that people are going to reestablish ground rules, they're going to figure out some of the core issues, and some of these things may make it, and some of these things may not make it. Like cryptocurrency, like I don't know whether it makes it or not, but certainly the blockchain as a technology we're going to be incorporating in what we do, and maybe the blockchain replaces VPNs and last generation's way of protecting zeros and ones. If AI is figuring out how to read an MRI in five minutes, it's a good thing, and if the AI is teaching you how to exclude old folks for me finding jobs, it's a bad thing. I think as technology forms, there's always Spectre and 007, right? There's always good and bad sides and you know, I think if you believe-- >> I'm with you on that. I think value shifts and I think ultimately it's like however you want to look at it will shift to something, value activity will be somewhere else. Behind me in the bookshelf is a book called The World is Flat and you're quoted in it a lot as a futurist because you have inherently that kind of view, well that's not what you do for a living, but you're kind of in an opt-- >> Alan: Marketing, futurist, kind of same thing. >> Thomas Friedman, the book, that was a great book and at that time, it was game changing. If you take that premise into today where we are living in a flat world and look at cryptocurrency, and then over with the geo political landscape, I mean I just can't see why the Federal Reserve wouldn't reign in this cryptocurrency because if Japan's going to control a bunch of, or China, it's going to be some interesting conversations. I mean I would be like all over that if I was in the Federal Reserve. >> I think people-- Look, cryptocurrency's really interesting and I think people a little over-rotated. If you look at the amount of GDP that's invested in cryptocurrency, it's like, I don't know, there might've been, you know 20 years ago the same amount involved invested in Beanie Babies, right? I mean things show up for a while and the question is is it sustainable over time? Now I'm trained as an economist, you and I have had this conversation, so I don't know how you have a series of monetary without kind of governmental backing, I just don't understand. But I do understand that people find all kinds of interesting ways to trade, and if it's an exchange, like I mean what's the difference between gold and cryptocurrency? Somebody has ascribed a value to something that really has no efficacy outside of its usage. Yeah I mean you can make a filling or bracelets out of gold but it doesn't really mean anything except people agree to a unit of value. If people do that with cryptocurrency, it does have the ability to become a real currency. >> I want to pick your perspective on this being an economist, this is is the hottest area of cryptocurrency, it's also known as token economics, is a concept. >> Alan: Token economics. >> You know that's an area that theCUBE, with CUBE coins, experimenting with tokens. Tokens technically are used for things in mobile and whatnot but having a token as a utility in a network is kind of the whole concept, so the big trend that we're seeing and no one's really talking about this yet is instead of having a CTO, Chief Technology Officer, they're looking for a CEO, a Chief Economist Officer, because what you're seeing with the MVP economy we're living in and this gamification which became growth hack which didn't really help users, the notion of decentralized applications and token economics can open the door for some innovation around value and it's an economic problem, how you have a fiscal policy of your token, there's a monetary policy, what's it tied to? A product and a technology, so you now have a now a new, twisted, intertwined mechanism. >> Well you have it as part of this explosion, right? We're at a period of time, it feels like there's a great amount of uncertainly because everything's, you know, there's a lot of different forces and not everybody's in control of them, and you know, it's interesting. Google has this architecture, they call it BeyondCorp, where the concept is like networks are not trusted so I will just put my trust in this device, Duo Security's a great example of a company that's built a technology, a security technology around it which is completely antithetical to everything we know about networks and security. They're saying everything's the internet, I'll just protect the device that it's on. It's a kind of perfect architecture for a world like where nobody is in charge, so just isolate those, buy this, what is a device? It's a token too, it's a person, your iPhone's your personal token. Then over time, systems will form around it. I think we just have to, we always have to learn how to function in a different type of economy. I mean democracy was a new economy 250 years ago that kind of screwed around with most of the world, and a lot of people didn't think it would make it, in fact we went through two World War wars that it was a little on the edge whether democracy was going to make it and it seems to have done okay, like it was pretty good IPO to buy into. You know, in 1776. But it's always got risks and struggles with it. I think if, ultimately it comes together, it's whether a large group of people can find a way to function socially, economically, and with their personal safety in these systems. >> You bring up a great point, so I want to go to the next level in this conversation which is around-- >> Alan: You've got the wrong guy if you're going to the next level because I just tapped out. >> No, no, no we'll get you there. It's my job to get you there. The question is that everyone always wants to look at, whether it's someone looking at the industry or actors inside the industries across the board, mainly the tech and we'll talk about tech, is the question of are we innovating? You brought up some interesting nuances that we talk about with token economics. I mean Steve Jobs had the classic presentation where he had street signs, technology meets liberal arts. That's a mental image that people who know Steve Jobs, know Apple, was a key positioning point for Apple at that time which was let's make computers and technology connect with society, liberal arts. But we were just talking about is the business impact of technology, the economics, and that's just not like just some hand waving, making technology integrate with business. You're in the security business, There are some gamification technology, gamification that's business built into the products. So the question is, if we have the integration of business, technology, economics, policy, society rolling into the product definitions of innovation, does that change the lens and the aperture of what innovation is? >> I think it does, right? The IT industry's somewhere between three and four trillion dollars depends on how it counts in. It grows pretty slowly, it grows by a low single digit. That tells me as composite, like is that, that slow growth is a structural signal about how consumers of technology think in a macro sense. On a micro sense, things shift very rapidly, right? New platforms show up, new applications show up, all kinds of things show up. What I don't think we have done yet, to your point, is in this new integrated world, the role of technology is not just technology anymore. I don't think, you know you said you need Chief Economical Officer, what about Chief Political Officer? What about a Chief Social Officer? How many heads of HR make decisions about the insertion of systems into their business? And that's what this kind of iRobot concept is in my mind which is that you know, we are exceeding control of things that used to be done by human beings to systems and when you see control, the social mores, the political mores, the cultural mores, and the human emotional mores have to move with it. We don't tend to think about things like that. We're like, "I win and my competitors lose." Like technology used to be much more of a zero sum, my tech's better than yours. But the question is not just is my tech better than yours, is my customer better off in their industry for the consumption of my technology of inserting it into their offering or their service? You know what, that is probably going to be the next area of study. The other thing that's very important in whether, any of you have read Peter Thiel's book Zero to One, the nature of competition technology used to feel like a flat playing field and now the other thing that's rising is do you have super winners? And then what is the power of the super winners? So you mentioned whether it's Facebook or Google or Amazon or you know, or Microsoft, the FANG companies right? Their roles are so much more significant now than the Four Horsemen of the Nasdaq were in 2000 when you had Intel and Cisco and Oracle and Saht-in it's a different game. >> You're seeing that now. That's a good point, so you're reinforcing kind of this notion that the super players if you will are having an impact, you're mentioning the confluence of these new sectors, you know, government, policy, social are new areas. The question is, this sounds like a strategic imperative for the industry, and we're early so it's not like there's a silver bullet or is there, it doesn't sound like there, so to me that's not really in place yet, I mean. >> Oh no. We're not even in alpha. We have demo code for the new economy and we're trying to get the new model funded. >> John: That's the demo version, not the real version. It's the classic joke. >> Yeah this not the alpha or the beta version that like you're going to go launch it. If people think they're launching it, I think it's a little preliminary and you know, it's not just financial investment, it's like do I buy in? I'll tell you something that's really interesting. I've been visiting a bunch of our customers lately and the biggest change I'd say in the last two years is they now have to prove to their customers they're going to be good custodians of their data. Think about that, like you could go to any digital commerce you do, any website you use and you give them basically the ticket to the Furrier family privacy, you do, but you don't spend a lot of time questioning whether they're really going to protect your data. That has changed. And it's really changing in B2B and in government organizations. >> The role of data to us is regulation, GDPR in Europe, but this is a whole new dynamic. >> It's not just my data because I'm worried about my credit card getting hacked, I'm worried about my identity. Like am I going to show up as a meme in some social media feed that's substituted for the news? I don't want to use the FN word, but you know what I mean? It is a really brave new world. It's like a hyper-democracy and a hyper-risky state at the same time. >> We're living in an area of massive pioneering, new grounds, this is new territory so there's a lot of strategic imperatives that are yet not defined. So now let's take it to how people compete. We were talking before we came on camera, you mentioned the word we're in an MVP economy, minimum viable product concept, and you're seeing that being a standard operating procedure for essentially de-risking this challenge. The old way of you know, build it, ship it, will it work? We're seeing the impact from Hollywood to big tech companies to every industry. >> Well you've got a coffee mug for a company that does both. Amazon does MVP in entertainment, like we'll create one pilot and see if it goes as opposed to ordering a season for 17 million dollars to hey, let's try this feature and put it out on AWS. What's interesting is I don't think we've completely tilted but the question is will buyers of technology, of entertainment products, of any product start to say, "I'll try it." You know like, look, I've done four startups and I always know there's somebody I can go to get and try my early product. There are people that just have an appetite, right? The Jeffrey Moores, early adapter, all the way to the left of the-- >> They'll buy anything new. >> They'll try it, they're interested, they have the time and the resources, or they're just intellectually curious. But it was always a very small group of people in the IT industry. What I think that the MVP economy is starting to do is look, I Kickstarted my wallet. I don't know if I'm the only person who bought that skinny little wallet on Kickstarter, it doesn't matter to me, it had appeal. >> What's the impact of the MVP economy? Is it going to change to the competitive landscape like Peter Thiel was suggesting? Does it change the economics? Does it change the makeup of the team? All of the above? What's your thoughts on how this is going to impact? Certainly the encumbrance will seem to be impacted or not. >> I think two things happen. One, it attacks the structural way markets work. If you go back to classical economics, land, labor, and capital, and people who own those assets, now you add information as a fourth. If those guys were around now they would say that would be the fourth core asset, production, I'm sorry, means of production is the term. The people who can dominate that would dominate a market. Now that that's flattened out, you know, I think it pushes against the traditional structures and it allows new giants to kind of show up overnight. I mean the e-commerce market is rife with companies that have, like look at Stich Fix. A company driven by AI, fashions, tries to figure out what you like, sends it to you every month, just had a monster IPO. We invented, by the way the Spiegal Catalog, except like with a personal assistant and you know, it's changed that in just a short number of years. I think two things happen. One is you'll get new potential giants but certainly new players in the market quickly. Two, it'll force a change in the business model of every company. If you're in a cab in any city in the world, I'm not saying whether the app works there or not, Uber and Lyft has forced every cab company to show you here's the app to call the cab. They haven't quite caught up to the rest of the experience. What I think happens is ultimately, the larger players in an industry have to accommodate that model. For people like me, people who build companies or large technology companies, we may have to start thinking about MVPing of features early on, working with a small group, which is a little what the beta process is but now think about it as a commercial process. Nobody does it, but I bet sure a lot of people will be doing it in five years. >> I want to get your take on that approach because you're talking about really disrupting, re-imagining industry, the Spiegal catalog now becomes digital with technology, so the role of technology in business, we kind of talked about the intertwine of that and its nuance, it's going to get better in my opinion. But specifically the IT, the information technology industry is being disrupted. Used to be like a department, and the IT department will give you your phone on your desk, your PC on your desk or whatever, now that's being shattered and everyone that's participating in that IT industry is evolving. What's your take on the IT industry's disruption? >> Well look, it started 20 years ago when Marc Benioff and Salesforce decided to sell the sales forces instead of IT people, right? They went around to the end buyer. I don't think it's a new trend, I think a lot of technology leaders now figure out how to go to the business buyer directly and make their pitch and interestingly enough, the business buyer, if the IT team doesn't get on board, will do that. >> John: Because of cloud computing and ... >> Because of everything. The modern analog I think in our world is that the developers are increasingly in control. Like my friend Martin Casado up in Andreessen talks about this a lot. The traditional model on our industry is you build a product, you launch it, you launch your company, you work with the traditional analyst firms, you try to get a little bit of halo, you get customer references, those are the things you do and there was a very wall structured, for example, enterprise buying cycle. >> And playbook. >> Playbook, and there's the challenger sale and there's Jeffrey Moore and there's like seeing God. You've got your textbooks on how it's been done. As everything turns into code, the people who work with code for a living increasingly become the front end of your cycle and if you can get to them, that changes. Like I mean think about like, you know, Tom wrote about this actually in The World is Flat, like Linux started as a patchy. It didn't start with the IT department, it started with developers and there was the Linux foundation and now Linux is everything. >> There's a big enemy called the big mini computer, and not operating systems and work stations. >> Wiped out whole parts of Boston and other parts of the world, right? >> Exactly, that's why I moved out here. >> You filed client's server out here. >> I filed a smell of innovation. No but this is interesting because this location of industries is happening, so with that, so they also on the analog, so Martin's at Andreessen, so we'll do a little VC poke there at the VCs because we love them of course, they're being dislocated-- >> I don't (mumbles) my investors. >> Well no, their playbook is being challenged. Here's an example, go big or go home investment thesis seems not to be working. Where if you get too much cash on the front end, with the MVP economy we were just riffing on and with the big super powers, the Amazons and the Googles, you can't just go big or go home, you're going to be going home more than going big. >> I think they know that. I mean Dee-nuh Suss-man who's I think Chief Investment Officer at Nasdaq has a very well known talking line that there are half as many public companies as there were 10 years ago, so the exit scenario for our industry is a little bit different. We now have things like acqui-hires, right we have other models for monetization, but I think what the flip side of it is, we're in the-- >> Adapt or die because the value will shift. Liquidity's changing, which acqui-hires-- >> I think the investment community gets it completely and they spend a lot more time with the developer mindset. In fact I think there's been a doubling down focus on technical founders versus business founders for companies for just that reason because as everything turns to code, you got to hang out with the code community. I think there are actually-- >> You think there'll be more doubling down on technical founders? You do, okay. >> Yeah I think because that is ultimately the shift. There are business model shifts, but it's, you know, I mean like Uber was a business model shift, I mean the technology was the iPhone and GPS and they wrote an app for it, but it was a business model shift, so it can be a business model shift. >> And then scale. >> And then scale and then all of those other things. But I think if you don't think about developers when you're in our, and it's like we built Illumio because a developer could take the product and get started. I mean you can, developers actually can write security policy with our product because there's a class of customers, where as not everyone where that matters. There's other people where the security team is in charge or the infrastructure team is in charge but I think everything is based on zeros and ones and everything is based on code and if you're not sensitive to how code gets bought, consumed, I mean there's a GitHub economy which is I don't even have to write the code, I'll go look at your code and maybe use pieces of it, which has always been around. >> Software disruption is clear. Cloud computing is scale. Agile is fast, and with de-risking capabilities, but the craft is coming back and some will argue, we've talked about on theCUBE before is that, you know, the craftsmanship of software is moving to up the stack in every industry, so-- >> I think it's more like a sports league. I love the NBA, right? In the old days, your professional team, you'd scout people in college. Now they used to scout them in high school, now they're scouting kids in middle school. >> (laughs) That's sad. >> Well what it says is that you have to-- >> How can you tell? >> You know but they can, right? I think you know, your point about it craft, you're going to start tracking developers as they go through their career and invest and bet on them. >> Don't reveal our secrets to theCUBE. We have scouts everywhere, be careful out there. (laughs) >> But think about that, imagine it's like there's such a core focus on hiring from college, but we had an intern from high school two years ago. We hire freshman. >> Okay so let's go, I want to do a whole segment on this but I want to just get this point because we're both sports fans and we can riff on sports all day long. >> I'm just not getting the chance >> And the greatness of Tom Brady >> to talk about the Patriots. >> And Tom Brady's gotten his sixth finger attached to his hands for his sixth ring coming up. No but this is interesting. Sports is highly data driven. >> Alan: Yep. >> Okay and so what you're getting at here, with an MVP economy, token economics is more of a signal, not yet mainstream, but you can almost go there and think okay data driven gives you more accuracy so if you can bring data driven to the tech world, that's kind of an interesting point. What's your thoughts on that? >> Yeah I mean look, I think you have to track everything. You have to follow things, and by the way, we have great tools now, you can track people through LinkedIn. There's all kinds of vehicles to tracking individuals, you track products, you track everything, and you know look, we were talking about this before we went on the show right, people make decisions based on analytics increasingly. Now the craft part is what's interesting and I'm not the complete expert, I'm on the business side, I'm not an engineer by training, but look a lot of people understand a great developer is better than five bad developers. >> Well Mark Andris' 10x is a classic example of that. >> There's clearly a star system involved, so if I think in middle school or in high school, you're going to be a good developer, and I'm going to track your career through college and I'm going to try to figure out how to attach. That's why we started hiring freshmen. >> Well my good friend Dave Girouard started a company that does that, will fund the college education for people that they want to bet on. >> Sure, they're just taking an option in them. >> Yeah, option on their earnings. Exactly. >> They are. >> It sounds like token economics to me. (laughs) >> You know you can sell anything. We are in that economy, you can sell those pieces. The good news is I think it can be a great flattener, meaning that it can move things back more to a meritocracy because if I'm tracking people in high school, I'm not worrying whether they're going to go to Stanford or Harvard or Northwestern, right? I'm going to track their abilities in an era and it's interesting, speaking about craft, you know, what are internships? They're apprenticeships. I mean it is a little bit like a craft, right? Because you're basically apprenticing somebody for a future payout for them coming to work for you and being skilled because they don't know anything when they come and work, I shouldn't say that, they actually know a lot of things. >> Alan, great to have you on theCUBE as always, great to come in and get the update. We'll certainly do more but I'd like to do a segment on you on the startup scene and sort of the venture capital dynamics, we were tracking that as well, we've been putting a lot of content out there. We believe Silicon Valley's a great place. This mission's out there, we've been addressing them, but we really want to point the camera this year at some of the great stuff, so we're looking forward to having you come back in. My final question for you is a personal one. I love having these conversations because we can look back and also look forward. You do a lot of mentoring and you're also helping a lot of folks in the industry within just your realm but also startups and peers. What's your advice these days? Because there's a lot of things, we just kind of talked a lot of it. When people come to you for advice and say, "Alan, I got a career change," or "I'm looking at this new opportunity," or "Hey, I want to start a company," or "I started a company," how is your mentoring and your advisory roles going on these days? Can you share things that you're advising? Key points that people should be aware of. >> Well look, ultimately ... I never really thought about it, you just asked the question so, ultimately, I think to me it comes down to own your own fate. What it means is like do something that you're really passionate about, do something that's going to be unique. Don't be the 15th in any category. Jack Welch taught us a long time ago that the number one player in a market gets 70% of the economic value, so you don't want to play for sixth place. It's like Ricky Bobby said, if you're not first, you're last. (John chuckles) I mean you can't always be first, but you should play for that. I think for a lot of companies now, I think they have to make sure that, and people participating, make sure that you're not playing the old playbook, you're not fighting yesterday's battle. Rhett Butler in Gone With the Wind said, "There's a lot of money in building up an empire, "and there's even more money in tearing it down." There are people who enter markets to basically punish encumbrance, take share because of innovation, but I think the really inspirational is you know, look forward five years and find a practical but aggressive path to being part of that side of history. >> So are we building up or are we taking down? I mean it seems to me, if I'm not-- >> You're always doing both. The ocean is always fighting the mountains, right? That is the course of, right? And then new mountains come up and the water goes someplace else. We are taking down parts of the client server industry, the stack that you and I built a lot of our personal career of it, but we're building this new cloud and mobile stack at the same time. And you're point is we're building a new currency stack and we're going to have to build a new privacy stack. It's never, the greatest thing about our industry is there's always something to do. >> How has the environment of social media, things out there, we're theCUBE, we do our thing with events, and just in general, change the growth plans for individuals if you were, could speak to your 23 year old self right now, knowing what you know-- >> Oh I have one piece of advice I give everybody. Take as much risk as humanly possible in your career earlier on. There's a lot of people that have worked with me or worked for me over the years, you know people when they get into their 40s and they go, "I'm thinking about doing a startup," I go, "You know when you got two kids in college "and you're trying to fund your 401K, "working for less cash and more equity may not be "the most comfortable conversation in your household." It didn't work well in my household. I mean I'm like Benjamin Button. I started in big companies, I'm going to smaller companies. Some day it's just going to be me and a dog and one other guy. >> You went the wrong way. >> Yeah I went the wrong way and I took all the risk later. Now I was lucky in part that the transition worked. When I see younger folks, it's always like, do the riskiest thing humanly possible because the penalty is really small. You have to find a job in a year, right? But you know, you don't have the mortgage, and you don't have the kids to support. I think people have to build an arc around their careers that's suitable with their risk profile. Like maybe you don't buy into bitcoin at 19,000. Could be wrong, could be 50,000 sometime, but you know it's kind of 11 now and it's like-- >> Yeah don't go all in on 19, maybe take a little bit in. It's the play and run-- >> Dollar cost averaging over the years, that's my best fidelity advice. I think that's what's really important for people. >> What about the 45 year old executive out there, male or female obviously, the challenges of ageism? We're in economy, a gig economy, whatever you want to call, MVP economics, token economics, this is a new thing. Your advice to someone who's 45 who just says "Hey you're too old for our little hot startup." What should they do? >> Well being on the other side of that history I understand it firsthand. I think that you have an incumbent role in your career to constantly re-educate yourself. If you show up, whether you're a 25, 35, 45, 55, or 65, I hope I'm not working when I'm 75, but you never know right? (mumbles) >> You'll never stop working, that's my prediction. >> But you know have you mastered the new skills? Have you reinvented yourself along the way? I feel like I have a responsibility to feed the common household. My favorite part of my LinkedIn profile, it says, "Obedient worker bee at the Cohen household," because when I go home, I'm not in charge. I've always felt that it's up to me to make sure I'm not going to be irrelevant. That to me is, you know, that to me, I don't worry about ageism, I worry about did I-- >> John: Relevance. >> Yeah did I make myself self-obsolescent? I think if you're going to look at your career and you haven't looked at your career in 15 years and you're trying to do something, you may be starting from a deficit. So the question, what can I do? Before I make that jump, can I get involved, can I advise some small companies? Could I work part time and on the weekends and do some things so that when you finally make that transition, you have something to offer and you're relevant in the dialogue. I think that's, you know, nobody trains you, right? We're not good as an industry-- >> Having a good community, self-learning, growth mindset, always be relevant is not a bad strategy. >> Yeah, I mean because I find increasingly, I see people of all ages in companies. There is ageism, there is no doubt. There's financial ageism and then there's kind of psychological bias ageism, but if you keep yourself relevant and you are the up to speed in your thing, people will beat a path to want to work for you because there's still a skill gap in our industry-- >> And that's the key. >> Yeah, make sure that you're on the right side of that skill gap, and you will always have something to offer to people. >> Alan, great to have you come in the studio, great to see you, thanks for the commentary. It's a special CUBEConversation, we're talking about the future of technology impact the society and a range of topics that are emerging, we're on a pioneering, new generational shift and theCUBE is obviously covering the most important stories in Silicon Valley from figuring out what fake news is to impact to the humans around the world and again, we're doing our part to cover it. Alan Cohen, CUBEConversation, I'm John Furrier, thanks for watching. (upbeat music)

(cheerful music) >> Voiceover: Live, from Los Angeles, it's theCUBE covering Open Source Summit North America 2017, brought to you by the Linux Foundation and Red Hat. >> Okay, welcome back here when we're here live with theCUBE coverage of Linux Foundation Open Source Summit North America in Los Angeles, I'm John Furrier, Stu Miniman, our next guest is Arpit Joshipura, General Manager of Networking the Linux Foundation. Welcome back to theCUBE, great to see you. >> Thank you, nice to be here again. >> Always good to talk networking, as Stu and I always say networking is probably the most active audience in our community, because at the end of the day, everything rolls downhill to networking when the people complain. It's like "where the hell's my WiFi, "where's the patent latency," networking SDN was supposed to solve all that. Stu, we're still talking about networking. When are we going to fix the network? It's always in the network, but important. In all seriousness, a lot of action continues and innovation to networking. >> Absolutely. >> What's the update? >> Update is very exciting. So first of all, I can confidently say that open source networking, not just networking, but open source networking is now mainstream. And it's mainstream in the telcos, in the carriers, service providers, it's getting there in the enterprise. And Linux Foundation is really proud to host eight of the top 10 projects that are in open source networking. ONAP, ODL, OPNFV, Fido, you know, the list goes on. And we're really excited about each of these projects, so good momentum. >> We've been seeing and talking about it too, we all, joking aside, the intro there, but in all seriousness we've been saying, we get better the network, it's finally happening. Has it been a maturization of the network itself, has it been industry force and what have been the forces of innovations been? OpenStack has done some great work, they're not getting a lot of love these days with some people, but still we've seen a lot of production workflows at OpenStack, OpenStack's still there, rocking and rolling. New projects are onboarding, you see the telcos getting business models around digital. What's the drivers? Why is network mainstream now? >> I think it's a very simple answer to that, and that is before 5G and IoT hit the market, network better be automated. It's a very simple requirement. And the reason is very self-explanatory, right? You can't have an IoT device on the call on hold while you get your service up (laughs). So, it's IoT, right? And it is the same thing on 5G, a lot of new use cases around cars or around low latency apps. You need automation, and in order to have automation, a carrier or a solution provider goes through a simple journey. Am I virtualized? Yes or no? Am I using the building blocks of SDN and NFV? Yes or no? And the third, which is now reality, which is, am I using open source to do it? Yes, and I'm going to do it. And that's the driver right? I mean it's all- >> Automation, when you started throwing out a lot of TLAs, you talk about SDN and NFV, we've got a four-letter acronym that we need to talk about. The Open Network Automation Platform. Why don't you bring your audience up to speed, what that is, the news that you have this week. >> Absolutely, so ONAP was launched earlier in 2017. It's a combination of two open source projects, ECOMP and Open-O, and we wanted to bring the community together versus sort of fragmented, and because our end users are asking for a harmonized solution. So we brought it together. It was launched earlier this year as we talked about, but the most significant thing is it has received tremendous support from the member community. So at OSS today, we just announced that Vodafone has joined as a platinum member. They will be on our board, and as you know Vodafone is one of the top providers. So if you add up all the subscribers that are being influenced by ONAP, they come to 55%. So out of the 4.5 billion subscribers that exist, more than 55% will be influenced by ONAP and the work that happens. That includes China Mobile, China Telecom, China Unicom, all of the China, Bell Canada, AT&T obviously who sort of was the founding member, Orange, Reliance Jio from India. So we've got, Comcast joined earlier in the quarter, so we've got cable companies, carriers, all joining. And to be very honest, I'll probably just give you the list of all the networking vendors that are participating here, and I've list Amdocs, Cisco, Ericsson, GigaSpaces, Hua Wei, IBM, Intel, Nokia, Tech Mahindra, VMware, ZTE, Juniper, you know, you name it. >> Arpit, I mean the long story short is-- >> Just cause they're involved does that mean they're actually working-- >> They're active. Active. >> we're not going to be critical on this. >> But come on, even Cisco's involved in the open source stuff, right? >> They've very active. >> We've had lots of guests on from Cisco, Lulu Tucker's been on many many times. We know the open source there, but it used to be, networking was very proprietary. Now, it wasn't SDNs going to totally change everything, it's lots of different pieces, lots of different projects. It kind of felt like the river slowly wearing down the mountain as to this transition from proprietary to open source. >> I think what happened is if you just look at four years back, it was proprietary. Not because people liked it, that was the only game in town. When the open source industry, especially in the networking, and this is a hundred year old industry, telecom right? When it came in in the desegregated manner, hardware and software separated, control plane separated from data plane, all of that happened, and what happened suddenly was each components started becoming mature. So they're production-ready components, and what ONAP and what Linux Foundation is intending to do this year is trying to bring all the components into a system solution. So that it's easy to deploy, and all you have to do is point, click a service, everything below it will all be automated and integrated. >> Well the telcos are under a lot of pressure. I mean this has been a decade run, over-the-top they've been struggling with that from years ago, decade ago or more. But now they're getting their act together. We're seeing some signs, even VMworld. Stu, Pat Gelsinger said 5G's the next big kahuna in networking the next 20 years, you can validate it. This is going to be a 20 year changeover, so as the Linux Foundation, which essentially is the organic growth engine for this community, what do you guys see in that 20 years? Cause I see 5G's going to create all these connection points. IoT is going to be massive. That's going to increase the surface area for potential attacks. We're seeing a networking paradigm that's moving from old guards Cisco, Juniper, and some of the names you mentioned. They got to make some changes. How are they adjusting? What's going on so the next 20 years we don't have more conflict and more identity politics. >> I'll tell you one thing, I come from a vendor community, right? So I really appreciate the work they're doing. Part of the reason you would have seen in the past a vendor dragging their feet is because of fragmentation in the community. You as a vendor do not know where to put your resources, people, and where you put your money. What we're doing at the Linux Foundation is starting to harmonize all that. And once you do that and you have enough of a scale and enough of a community, there is no shortage of people and developers that the vendors are contributing to. >> John: What's some of the proof points that you can share? >> Okay, so ONAP, from start to now, about 1100 Wiki members already. That means 1100 unique developers are joining the project. Over 50 members. We ran out of VMs, I mean it's like that has not happened in any project for over five years. We had to fire up people more. So you can see that... And this is not just, these are competitors, but if you step back and look at it, they're competitors from an end user perspective, but they're solving the common problem in which they don't get any money. They don't make any money. These are things that absolutely need to happen. The plumbing, the infrastructure, the orchestration, the control layer, the data plane layer, all of that need to just happen, it should just work. And let them differentiate on top. We are actively seeing almost everybody participating significantly. >> Stu, let's hear your thoughts on this. You guys are both, I view you guys both as experts and influencers in this networking ecosystem, so I got to ask you both a question. CNCF has gotten a lot of traction with funding, sponsorships are off the charts, you're seeing massive tractions, Stu, where you also see that KubeCon Cloud Native, but you have native clouds, I call them native clouds, in Amazon and then soon-to-be enterprises that want to run software-defined networking. So the question is do you see the same kind of support going for your group as CNCF's getting? Is it just fashionable at this point, CNCF? Why isn't the networking getting as much love at least from a sponsorship standpoint. >> Let's define love. So if you define love as the 2017 ONS, which is our largest networking summit, we grew that 10%, everything was off the charts. The feedback, the content-- >> John: The attendance growth or sponsorships? >> Attendance, sponsorships, CFPs were 5x oversubscribed. Call for papers, for submissions, 5x oversubscribed. So we had a hard time picking the best of the best. ONS 2018 is going to be here in LA, we've already started getting requests on, you know, so we're the same boat. >> So you feel good. >> We feel good. >> Not about this, like you're winning. >> No, but I tell you-- >> There'll be positive numbers we know from the hype scale horses, Stu, answer your question and then maybe you guys can comment. So is it a matter of that there's more buzz in positioning involved in the hype side of CNCF now, and there's just meat and potatoes being done in the networking world, Stu? Cause you and I both know, if no one has nothing to say, they've got to kind of market themselves. >> So John, think back to five years ago, how much hype and buzz there was around SDN. John, you and I interviewed like Martin Casado, he just bought for $1.4 billion, all these startups, lots of VC investment, so I think we're further down the maturity curve. Now networking's always-- >> John: People going to work, they're doing their job. >> It's real, it's in production-- >> It's funny-- >> It's not parb, I always say when you move from PowerPoint to production, real things happen. >> I always say, if there's going to be sizzle, I better see some steak on the grill, so what's happening is steak is cooking right now. >> And John, so one of the things we say, networking, no offense to all my friends in networking, networking is never sexy. >> Oh, come on Stu, networking is totally sexy. >> I always say it's cool again. >> Networking has never lost its edge. >> It absolutely is majorly important, but Arpit, take us in, you know, Kubernetes is hot, containers get a lot of buzz and everything. Networking, critical piece of making sure that this works, feels like, I think back to the virtualization days, it took us 10 years to kind of solve those things that that abstraction layer broke. It feels like networking is further ahead than it was, it's moving faster, we understand it's not something that's just kind of oh we'll let the networking guys get to it eventually. Networking and security, which often has that networking tie are front and center now. >> Very good point, and I think what you have to also sort of step back and look at is what are the problems that need to be solved from an end user perspective? So the hardest networking problems at the data plane control layers, check. Next big problem that remain to be solved was orchestration, data analytics, and things like that. Check, solve, with ONAP. Now the next problems that need to be solved are containerization of enterprise app, which is where Kubernetes and... and then how does containerization work with networking? That's all the C&I, the interfaces. I would say next year, you will start to see the interworking and the blend of these "hot projects" where they can all come together. >> Stu, you were there in 2010, I looked right in the camera and said to Dave Vellante, storage is not as sexy. And Dave called it snoreage, cause snoreage is boring. (Stu laughs) >> And at that time, the storage industry went on a run. And we well-documented that. Sexy is, networking is sexy. And I think that we-- >> I call it cool. >> And I just tweeted, 25g is a good indicator of a 20 year run, and networking is the big kahuna as Pat Gelsinger said in IoT, so I think, Stu, I think it's going to be very apparent, sexy. I just don't see a lot of amplifications, so you don't see a lot of people marketing the sizzle. I think, being done I would agree, but Stu, there's more buzz and hype on the CNCF side than networking. >> That's fair. I think it is always as you said, it's the initial phase of any project that gets a lot of clicks and a lot of interest, and people want to know about it. A lot of the buzz is around, just awareness. The classic marketing cycle, and I think we're past that. It was therefore ONAP in January, we're past that. >> Alright, so here's the question, final question. So the steak is coming off the grill in our metaphor here, what are people-- what is that product, what's happening, what is the big deliverable right now from a networking standpoint that people can bet on and know that they can cross the bridge into the future with it. >> You will see a visible difference, you as in an end user, an enterprise, or a residential consumer. You will see a significant difference in terms of how you get services. It's as simple as that. Why? Because it's all automated. Network on-demand, disaster recovery, video conference services. Why did over-the-top players, why were they so successful? If you need a Gmail ID, you go in, you get one. It's right there. Try getting a T1 line five years ago. That would be six weeks, six months. So with the automation in place, the models are converging. >> So provisionings are automatically happening-- >> Provisionings, service, and then the thing that you will not see but you will see in the services impact, is the closed loop automation that has all the analytics built in. Huge, huge. I mean, network is the richest source, and by the way, I'll come back next year and I'll tell you why we are cool again. Because all of a sudden, it's like oh my god look at that data and the analytics that the network is giving me. What can I do with it? You can do AI, you can do machine learning, you can do all these things. >> Well, we're looking forward to it, the eye of the storm is kind of happening now I think in networking, Stu and I always have debates about this, cause we see a lot of great action. Question is, let's see the proof points, you guys are doing some good work. Thanks for sharing, Arpit, really appreciate, General Manager of Networking at Linux Foundation. It's theCUBE, more live coverage from Los Angeles, the Open Source Summit North America. I'm John Furrier, Stu Miniman, be back with more live coverage after this short break. (techno music)

>> Voiceover: Live from Las Vegas, it's theCUBE covering VMworld 2017, brought to you by VMware and it's ecosystem partners. (electronic music) >> Hello everyone, welcome back to live coverage. This is theCUBE at VMworld 2017, our eighth year covering VMworld, going back to 2010. I'm John Furrier, co-host of theCUBE, and my co-host this segment, Justin Warren, industry analyst, and our guest, Alan Cohen, Chief Commercial Officer, COO for Illumio. Great to see you, CUBE alumni. Special guest appearance, guest analyst appearance, but also Chief Commercial Officer, Illumio is a security start-up, growing. Thanks for coming on. >> It's not even a startup anymore. >> Justin: It's technically a startup. >> John: After five years, it's not a startup. >> It's not a startup right, you raise $270 million, it's not exactly a startup. >> (laughs) That's true. Well, welcome back. >> Alan: Thank you. >> Welcome back from vacation. Justin and I were talking before you came on, look at, let's go get you on and get some commentary going. >> Alan: Okay. >> You're an industry vet, again, in security, some perspective, but industry perspective, you've seen this VMware cycle many times. What's your analysis right now, obviously stock's 107, they don't to a cloud, no big catback, so it's good. You've made a decision. What's your take on this? >> I've been coming to VMworld for a long time, as you guys have as well, and from my perspective, this was probably the biggest or most significant transition in the history of the company. If you think about the level of dialogue, obviously there's a lot about NSX, which came from the Nicira, I'm always happy about. But, if you hear about, talking about cloud, and kind of talking about a post-infrastructure world, about capabilities, about control, about security, about being able to manage your compute in multiple environments, this is, I think, the beginning of a fundamentally different era. I always think about VMware, this is the company that defined virtualization. No one will argue with that point, so when they come out and they start talking about how are your computes going to operate in multiple environments? And how you're going to put that together, this is not cloud-washing, this is a fairly, all right they have fully acknowledged that the cloud is not a fad, the cloud is not for third tier workloads, this is mainstream computing. I think this is the third wave of computing and VMware is starting to put its markers down for the type of role that it intends to play in this transition. >> Yeah, I agree. >> We have to argue if you don't agree (laughs). >> I'll mostly agree with you, how about that? >> All right that's good. >> At this show, VMware has stopped apologizing for existing. I think, previously, they've been trying to say, "No, no we're a cloud too, "in fact, we're better than cloud "and you shouldn't be using it." It forced customers to choose between two of their children, really, like which one do you love more? And customers don't like that. Whereas at this show, I think it's finally being recognized that customers want to be able to use cloud, as well as use VMware, so that they're taking a more partnership approach to that and it's more about the ecosystem. And, agree, they're not about the infrastructure so much, they're not about the Hypervisor, they're about what you run on top of that. But, I still think there's a lot of infrastructure in that because VMware is fundamentally an infrastructure. >> Alan: Well, you got to get paid, right? >> That's right, (Alan laughs) and there's a lot of stuff out there that's already on VMware. What do you think about the approach? Like with cloud, they have a lot of people doing things in new ways and you mentioned this is the third wave of computing that we're doing it a new way. A lot of VMware stuff is really the whole reason it was popular is that we have people doing things a particular way on physical hardware and then they kept doing more or less the same thing, only on virtual hardware. What do you say about people who are still essentially going to be doing virtual hardware, they're just running it on cloud now? That's not really changing much. >> The way I think about it is: Are you going to be the Chevy Volt or are you going to be a Tesla? What I mean by that, and by the way now GM has the Bolt, which is their move toward Tesla, which is that if you look at the auto industry, they talk about hybrid and you talk about it, and you talk to Elon Musk and he goes, "Hybrids are bullshit." Either you're burning gas, or you're using electricity. To me, this cloud movement is about electricity, which is: I'm going to use cloud-native controls, I'm going to use cloud-native services, I'm going to be using Python and Ruby, and I'm going to have scripting, and I'm going to act like DevOps. And so, cloud is not just a physical place where I rent cycles from Amazon or Azure, it is a way of computing that's got a distributed, dynamic, heterogeneous, and hybrid. When you're in your virtualization on top of cloud, you're still in your Chevy Volt moment, but when you say, "I'm going to actually be native "across all of these environments," then you're really moving into the Tesla movement. >> Hold on. Let me smoke a little bit, I'll pass it over to you because that's complete fantasy. Right now the reality is, is that-- >> It's legal here in LA, in Las Vegas. >> (laughs) I don't think so yet, is it? >> Only outside. >> You can go to Walgreens across the street. >> Whatever you're smoking is good stuff. No, I agree, cloud obviously as a future scenario, there's no debate, but the reality is, like the Volt, Tesla is a one-trick pony. So, greenfield-- >> But, once again, I'm not disagreeing with you, John, but my point is that VMware and most of the IT industry is not there. Most companies don't have DevOps people, you run up and down, you go to all of these shows, ask these guys how many of these guys does Ruby, Python, real scripting, they don't do that. They still have Lu-Wise and management consults and they have the old IT, but this is the beginning movement-- >> They've got legacy bag, I mean we call it legacy baggage in the business, we know what that is. >> Heritage systems. (all laugh) >> Well, Gelsinger was here, I had him in at one o'clock and I kind of, sometimes VMware, they make the technical mistake in PR, they don't really get sometimes where to position things, but the Google announcement was very strategic intent, but they kind of made it a land grab and they tried to overplay their hand, in my opinion, on that one thing, it's strategic intent. This audience, they're not DevOps ready, they're Ops trying to do Dev, so they're not truly ready. So, it's okay to say, "Here's Amazon. "Great, that's today, if you want to do that, "let's get going, checking the boxes, "we're hitting the milestones." And then to dump a headroom deal announcement, that's more headroom, which is cool, but not push it on the Ops guys. >> Here's the opportunity and here's the risk: If Amazon is a $16 billion a year business, it's a rounding error in IT spend. When you take the hype away, nothing against it, and I love that prices are cheaper at Amazon and you can buy a Dot in the fruit aisle, that would totally-- >> John: I think the margins are like 60% (laughs). >> On your cloud. >> My wife took a picture of a rib steak and it said $18, now $13.99, I said, "Fantastic, thank you, Jeff Bezos. "We're eating well, "and we're going to have a little extra money." What I think this transition is not about infrastructure, it's about how IT people do their job. >> John: That's a main point. >> Justin: That's a big, big change. >> Yeah. >> Okay, in this show today doing your job, Justin I want you to comment on this because you were talking with Stu about it. I'm a VMware customer, what do I care about right now in my world? Just today. >> Well, in my world I've got conflicting things, I need to get my job done now. There's nothing different about the IT job, really, which is a shame because some of it needs to change, but there is a gradual realization that it's not about IT, it's not about building infrastructure for the sake of, "Because I like shiny infrastructure." It's, "I'm being paid by my business "to do IT things in service of the business." I have customers who are buying Apples, or using Apple docs, you're laundering. >> In IT you're paid for an outcome. You don't create the outcome. The way IT works is business creates the outcome, IT helps fulfill the outcome, unless you work-- >> John: Is IT a department today? >> Yeah, it's still a department. >> It's still a department? >> Yeah, it is, but it's a department in the same way that, well finance is important, but it's actually the business. Sales is part, they're all integrated. In a really well-run business, they're all integrated. >> How do you know what a real business is? You go to a building, you go to the main offices, you visit the marketing floor, you visit the IT floor. Tell me what the decor is like. They'll tell you what they care about in a business. (John laughs) I've been in a lot of IT shops, not the beautiful shiny glass windows because it's perceived as a back office cost center. >> Digital transformation is always about taking costs, that's table stakes, but now some of the tech vendors need to understand that as you get more business focused, you got to start thinking about driving top line. >> You're also thinking about being in the product. For example, my company, we have three of the four top SAS vendors, as Illumio customers, we do the micro-segmentation for them. We're not their micro-segmentation, we're a component in the software they sell you guys. >> Justin: You're an input. >> Yeah, you are a commodity in the mix of what somebody's building and I think that's going to be one of the changes. The move to cloud, it's not rent or buy, it's not per hour per server, or call Michael Dell and send me a bunch of Q-series, or whatever the heck it's called, it's increasingly saying, "We have these outcomes, we have these dates, "we have these deliverables, "what am I doing to support that and be part of that?" >> Justin: That's it, it's a support function. It's a very important support function, but there's very few businesses, like digital transformation, I don't like that as a term-- >> What the heck does that mean? >> It means something to do with fingers. >> Alan: You use it a lot, what does it really mean, digital transformation? >> To me, first of all, I'm not a big hype person, I like the buzz word in the sense that it does have a relevance now in terms of doing business digitally means you're completely 100% technology-enabled in your business. That means IT is a power function, not a cost center, it's completely native, like electricity in the company-- >> Unless, let's say I have two customers, I have the Yellow Cab company of Las Vegas and I have Uber or Lyft as a customer. My role, as a technologist, or technology provider, is dramatically different in either one of those-- >> Digital transformation to me is a mindset of things like, "I'm going to do a blockchain, "I'm going to start changing the game, "I'm going to use technology "to change the value equation for my customer." It's not IT conversation in the sense of, let's buy more servers to make something happen for the guy who had a request in that saying, "Let's use technology digitally to change the outcomes." >> But, given that, if we assume that that's true, then there's two ways of doing that. Either we have the IT people need to learn more about business, or the business people need to learn more about IT. >> That's right. >> Which one do you think should happen? Traditionally-- >> I think they're on a collision course. >> I don't think you can survive as a senior executive in most businesses anymore by saying, "Oh, I'll get my CIO in here." >> I would like to believe that that's true, but when people say that it should be a strategic resource and so on, and yet we spend decades outsourcing IT to someone else. If it's really truly important to your business, why aren't you doing it yourself? >> Justin, it's a great question and here's my observations, just thinking out loud here. One, just from a Silicon Valley perspective, looking at entrepreneurial as a canary in the coalmine, you've seen over the past 10-15 years, recently past 10, entrepreneurs have become developer entrepreneurs, product entrepreneurs, have become very savvy on the business side. That's the programmer. When we see Travis with Uber, no VC, they got smart because they could educate themselves. AngelList, Venture Hacks, there's a lot of data out there, so I see some signs of developers specifically building apps because user design is really important, they are leading into, what I call, the street MBA. They're not actually getting an MBA, they don't read the Wall Street Journal, but they're learning about some business concepts that they have to understand to program. IT I think is still getting there, but not as much as the developers. >> Here's a great question that I've learned over the years, and look, I'm coming out of the IT side, as we all are. When I visit a customer and I try to sell them my product, my first question is, "If I didn't exist, what would you do? "And if you don't buy my product, what happens in your business?" And if they're saying, "I have this other alternative." Or it's like, "Ah, we'll do it next year." I mean, maybe I can sell them some product, but what they're really telling me is, "I don't matter." >> All right, let's change the conversation a little bit, just move to another direction I want to get your thoughts on. And I should have, on the intro, given you more prompts, Alan. You were also involved in Nicira, the startup that VMware had bought-- >> Alan: Before all this NSX stuff, I was early. >> Hold on, let me finish the intro. We've interviewed Martin Casado. Stu talks to us all the time, I'm sure Chess has been hearing on the other set, "Oh, hey Martin Casado." It was a great interview, of course they're on theCUBE directory. But, you were there when it was just developing and then boom, software-defined networking, it's going to save the world. NSX has become very important to VMware, what's your thoughts on that? What does the alumni from Nicira and that folks that are still here and outside of VMware think about what's it's turned into? Is it relevant? And where is it going? >> Look, I could have not predicted five years ago when Nicira was acquired by VMware, it would be the heart of everything that their CEO and their team is talking about, if you want to know if that's important, go to the directory of sessions and one out of every three are about NSX. But, I think what it really means is there's a recognition that the network component, which is what really NSX represents, is the part that's going to allow them to transcend the traditional software-defined data center. I have two connections, so Steve Herrod is my investor, Steve is the inventor of the software-defined data center. That was the old Kool-Aid, not the new Kool-Aid. We've left the software-defined data center, we've moved into this cloud era and for them NSX is their driving force on being able to extend the VMware control plane into environments they used to never play in before. That's imminently clear. >> John: Justin, what's your take on NSX? >> NSX is the compatibility mechanism for being able do VMware in multiple places, so I think it's very, very important for VMware as a company. I don't think it's the only solution to that particular problem of being able to have networks that move around, it's possible to do it in other ways. For example, cloud-native type things, will do the networking thing in a different way. But, the network hasn't really undergone the same kind of change that happened in server or it did in storage, it's been pretty much the same for a long, long time. >> You've had an industry structurally dominated by one company, things don't change when-- >> Justin: And it still is, yeah. >> John: Security, security, because we've got a little bit of time I want to get to security. You guys are in the security space. >> Thanks for noticing. >> (laughs) I still don't know what you did, I'm only kidding. Steve Harrod is your investor, former CEO of VMware, very relevant for folks watching. Guys, security Pat Gelsinger said years ago it should be a duo, we've got to fix this. Nothing has really happened. What is the state of the union, if you will, of security? Where the frig is it going? What the hell's going on with security? >> There's two issues with that. If we put our industry analyst hat on, security is the largest segment of IT where nobody owns 5% market share, so there's not gorilla force that can drive that. VMware was the gorilla force driving virtualization, Cisco drove networking, EMC, in the early days, drove storage, but when you get to security you have this kind of-- >> John: Diluted. >> It's like the Balkans, it's like feudal states. >> Justin: It's a ghastly nightmare. >> What I think what Pat was talking about, which we also subscribe to, there are some movements in security, which micro-segmentation is one of them, which are kind of reinstalling a form of forensic hygiene into saying, "Your practices, if they occur, "they will reduce the risk profile." But, I think 50% of the security solutions and categories-- >> So, if I've lost my teeth, I don't get cavities. That kind of thing going on. >> If you're a doctor and you're making rounds in the hospital, you wash your hands or you put on gloves. >> And that's where we are. That is the stage we are at with security is we're at the stage where surgeons didn't believe they should wash their hands because they knew better and they'd say, "No, this couldn't possibly be making patients sick." People have finally realized that people get sick and the germ theory is real and we should wash our hands. >> Your network makes you sick. Your network is the carrier. Everything that's happening in network is effectively the Typhoid Mary of security. (John laughs) We're building flat, fast, unsegmented Layer 3 networks, which allow viruses to move at the speed of light across your environment. So, movements like, what's that called App Defense? >> Justin: App Defense, yep. >> App Defense or micro-segmentation from Illumio and Vmware, are the kind of new hygiene and new practices that are going to reduce the wide-spread disease growing. >> From an evolution theory, then the genetics of networks are effed up. This is what you're saying, we need to fix-- >> No, the networks are getting back to what they were supposed to do. Networks move packets from point A to point D. >> The dumb network? >> Alan: Yes, the dumber the better. >> Okay. You agree? >> Alan: Dumb them down. >> Dumb networks, smart end points. Smart networks doesn't scale as well as smart end points, and we're seeing that with edge computing, for example. Distributed networking is a hard problem and there is so much compute going out there, everything has a computer in it, they're just getting tinier and tinier. If we rely on the network to secure all of that, we're doomed. >> Better off at the end point. And this fuels the whole IoT edge thing, straight up one of the key wave slides out there. >> What you're going to have is a lot of telemetry points and you're going to have a lot of enforcement points. Our architecture is compatible with this, VMware is moving in this direction, other people are, but the people that are clinging to the gum up my network with all kinds of crap, because actually people want it to go the other way. If you think about it, the Internet was built to move packets from point A to point B in case of a nuclear war and, other than routing, there wasn't a whole lot-- >> We still might have that problem (laughs) >> Yeah, well there's always that (laughs). >> Fingers crossed. >> Guys, we got to break, next segment. Al, I'll give you the last word, just give a quick plug for Illumio. Thanks for coming on and being a special guest analyst, as usual, great stuff. Little slow from vacation, you're usually a little snappier. >> Alan: Little slow off the vacation mark. >> Yeah, come on. Back in Italy-- >> Too much Brunello di Motalcino, yeah. >> John: (laughs) Quick plug for Illumio, do a quick plug. >> We're really great to be here. John, you and I talked recently, Illumio is growing very rapidly, clearly we are probably emerging as one of the leaders in this micro-segmentation movement. >> John: A wannabe gorilla. >> What's that? >> You're a wannabe gorilla, go big or go home. >> We are, well, gorillas have to start as little gorillas first, we're not a wannabe gorilla, we're just gorillas growing really rapidly. It takes a lot more food at the zoo to keep us going. About 200 people growing rapidly, just moved into Asia, Pat, we got a guy in your part of the world we work with. >> First of all, it's not a zoo, it's still a jungle. The zoo is not yet established. >> That's true. We're going to establish the zoo. Things are great at Illumio. We have amazing things on the floor here today of, basically the system will actually write its own security policy for you. It's a lot of movement into machine learning, a lot of good stuff. >> All right. Guys, thanks so much. Alan Cohen with Illumio, >> Alan: Thank you. >> Chief Commercial Officer. And Justin Warren, analyst, I'm John Furrier. More live coverage from VMworld after this short break. (electronic music)

(energetic music) >> Narrator: Live from Boston, Massachusetts it's the Cube, covering OpenStack Summit 2017 brought to you by the OpenStack Foundation, Red Hat, and additional ecosystem support. >> Hi and welcome back to SiliconANGLE TV's production of the Cube here at OpenStack Summit 2017 in Boston. I'm Stu Miniman joined with my co-host for the week, John Troyer. As you can see behind us, the day 2 keynotes letting out. John, it's always interesting to look at these shows. They had some demos that were awesome, a couple of demos were the demo gods were not smiling on them. They had Edward Snowden live via Q&A. They had Brian Stevens, who we're going to be talking with in a little bit, the CTO of Google, who was on The Early Start. For me, they're a little up and down. There's some of the vendor pitches in there, people are like, "Oh I have a great demo," and then you say, "Come to my booth "and see a bunch of my sessions." So, a little bit uneven and disjointed, which has been a some of the feedback you get about OpenStack in general over the last few years as to all those pieces come together. But yeah, what are your early thoughts coming out of the day 2 keynote? >> Well, it was definitely a keynote focused at the OpenStack community. We started off with open source and talking about the importance of open source, which is a little bit odd, because everyone here know that. I did like the message that OpenStack was composed of different projects, that it was a piece of the puzzle, not the whole puzzle. You and I both noted VMware's Scott Lowe tweeted, "It's good to the OpenStack Foundation talking about being a part of the overall solution, not the overall solution." I mean, as one example, they mentioned using etcd, which is a distributed key value store, instead of writing their own. Etcd powers Kubernetes. Your would be insane in 2017 to rewrite or distribute a key value pair, sorb at this point. Because, it's just out there, it's mature. You know, OpenStack has been around for seven years. There's been a lot of ecosystem grown up around them. >> Yeah, yeah. A couple of pieces on that. One is, there was a message about like, oh I can now take the individual components of OpenStack. I could actually do that before. I've noted, I've talked to a number of software companies, that when you did down into what they're doing, oh what do you know, there's, you know, there's Syndrr. Or, there's, you know, something in there, just as when I use AWS, I can use some of the individual components, same thing with OpenStack. It's not a monolith. There are the individual pieces. But, they're highlighting that a little bit more. They're saying use some of the pieces. The other thing, on the open source in general, they noted that like, in the artificial intelligence machine learning space, like, everyone that you see is using open source. Everything from Google and TensorFlow, is one that gets highlighted a lot. Amazon made a big push at their show about what they're doing with, you know, some of the machine learning. I can't remember right now, the program on there. But, right, in some of these emerging spaces, open source is the defacto way to do that. We had, in one of the conversations we had yesterday with one of the Cysco Distinguished Engineers, you know, it used to be standards. Now, open source really drives a lot of that. I actually got a quick conversation with Martin Casado, who had, you know, worked on a lot of open source things before Vmware acquired him. And, now he's at Andreessen Horowitz looking at all the open source models. So, unfortunately Martin didn't have enough time to come on the program, but we've had him on many times. Yeah, so sometime he's going to do that. >> Stu, I have a question. >> Stu: Yeah. >> The message today of being part of an ecosystem and being a componentized, open source set of projects, does that detract or add to this conversation around OpenStack Core versus Big Tent? >> I think Big Tent is dying. We talked to a number of the participants yesterday and said it was a little overblown. It does not mean that some pieces might still get worked on, but it's the core components. And you know, when dug into the survey, how many of the pieces do we really need? We want to make sure the Core works. I can have that distribution if I want to do what is OpenStack. When they highlighted those components, it wasn't 27 different projects there. You know, I think it was a handful of like six. >> Yeah. >> That were there. So, you know Swift and Syndrr, some interesting, cool little graphics. It was ironic, I tell you. The little graphic there, that was like a scary looking bear. It's like, I wouldn't want to run into him in a cartoon alley. Uh, but (laughs). >> Yeah, I did tweet. Yeah, there was an angry bear, kind of a poisonous spider, and a horse's behind. So, I'm not quite sure about the marketing there. But (laughs). >> What is the message you're sending? But, there's some fun. We've got, you know, Mark Collier and Jonathan Bryce coming on soon. We can ask them, you know, was this the community? And are there just some people that have a funny sense of humor, and this is how they show it? >> I did love the demos in today's talk, Stu. I especially liked, they spun up, live on stage, 15 from scratch, OpenStack clouds. And then, had them all join a CockroachDB cluster. I thought that was kind of cool and amazing. >> Yeah, absolutely. You talk about that hybrid, multi cloud world, showing it, you know, in reality, how that works. Pretty neat, and you know, you can actually see some applicability as to how that would fit into a customer environment. And, kudos to all the people. I mean, these were live, no net demos, not Camtasia, not some prerecorded things. Because like, oh wait, this thing's not quite ready to be able to be bootable, or you know, let me come in. I mean, they're up there on stage doing it. The wifi all seemed to work fine. That wasn't a challenge, but yeah, it was pretty cool. >> Well again, trying to give the message that OpenStack is indeed not a science project. That it's live, that it's configurable, that it's stable, that it's installable. And, I think that kind of message of stability, and configurability, and simplicity maybe is one of the ones they're trying to hit here today. >> Yeah, last thing I want to hit on, John, is I want to get your opinion. We throw out the term "open" a bunch. And, I'm watching some of the other industry things, and they say "open" when they mean "choice," as opposed to "open" as in "open source." So, you know, we see Google here, and Google talks about open. So many things that are now open source, a lot of times started out as a Google white paper or something. As we all say, we're all using open source which Google was using 10 years ago, right? You know, MapReduce, and Borg, and Spanner, and some of those things eventually get their way out. I've got some view points on this, but love to get your take first, yeah. >> Well, I mean, definitely it was an homage to open source this morning. In some ways, it was kind of a dig at AWS and Amazon, which uses a lot of open source tools, but does not share back. You know, OpenStack is clearly open source, and they were emphasizing that. I don't know. What are your thoughts, Stu? >> Yeah, it's, customers now, it used to be if you said open source, you know, go back 10, 15 years, and it was like, ooh, no. Now, open source is, a lot of times, a plus, something that they're asking for. Many companies are contributing and engaging in that. OpenStack is a great example of companies that have participated, you know, in helping to build OpenStack. That being said, you know, I always go to, you know, what's the problem to be solved, what's the solution that solves it. And, if it happens to be a little bit pre standard, or not 100% open source, most companies are fine with that. We were at Red Hat Summit last week with the Cube though, and everything they do is 100% open source. They're building their business. Their customers are really happy. So, you know, open source still has a little bit of a double edged sword as to how you do it. But, you know, open source absolutely, there's no question of if open source, it's how much, and to what extent, and where it fits. >> Sure, there is an ecosystem of providers here. There's always lock-in when you make a technical choice. But, in this case, I think they've successfully were trying to show off that there is a choice of clouds. There is an open, a set of open source components that you can mix and match. And so, that actually ties in very well to the interview with Edward Snowden. >> Yeah, absolutely, yeah. It was, and last point. Edward Snowden, towards the end he said fear is, I think the quote was, "the most powerful weapon in the world today." From a political statement, is what he's doing. Fear in IT is a powerful weapon. We know that, you know, enterprise and inertia, you know, tend to go together. With my background in networking, I used to draw these timelines. And, say, from when the time the standard was done to when, you know, the early majority adopt, is often times a decade. So, the technology adoption, moving the operational, we know the people piece is always tough to do, moving my applications. We think people are definitely moving faster, but fear is definitely something that holds them back. What do you see, john? >> Sure, I think the through line of the whole morning was about choice and diversity. Edward Snowden talked about the centralization of information services like Facebook, Google, and Twitter. And I think, and I think by implication, Amazon. And, I think the message that he was giving to the OpenStack crowd was look, you are enabling a multitude of services and a multitude of clouds, and that actually is a lever, a cultural lever against the over centralization of commercial forces, which are a little bit outside people's control. >> Yeah, so John, thanks for helping me wrap up day one. As always, we welcome our audience to please send us feedback. John and I are both pretty active on Twitter, very easy to get in touch with. We are at so many shows. You can check out SiliconANGLE TV. See where we're at. If we're not at a show that you think we should be at, reach, there's contact information at the top. If there's guests that we should have on our program, we're always looking for feedback. Love to get, especially those end user stories, talking about with interesting startups. So, we've got two more days of live coverage. So, for John and myself, stay with us. And, thanks, as always, for watching The Cube. (exciting music)

>> Announcer: Live from Santa Clara, California, it's The Cube. Covering open networking summit 2017. Brought to you by the Linux foundation. >> Welcome back. We are live in Santa Clara at the open networking summit 2017. Been coming here for a couple years, it's a lot of open source going on in storage, for a long time, a lot of open source going on in compute for a long time, and you know, networking was kind of the last one, but we had Martin Casado on on earlier today. He says it's 10 years since he started Nicira. And now, it's a billion dollar revenue run raid inside vmware, so I think the software defined networking is pretty real. We're excited for this next segment, Scott Raynovich, been cohosting all day, good to see you again, Scott. But we're kind of shifting, we're going to add to open networking, we're going to add to open, not compute, but OpenStack, I get them all mixed up, we were just-- >> It's all infrastructure, it's all in the family. >> All right, so our next guest here, representing the OpenStack foundation, is Ildiko Vancsa, get that right? She is the ecosystem technical lead for OpenStack, welcome. And Lisa-Marie Namphy, she's now officially the OpenStack ambassador, which if you follow her on Twitter, you would have known that a long time ago. >> For the U.S. There's several others globally, but for the U.S., yeah. >> So first off, welcome. >> Thank you. >> And what is the OpenStack team doing here at open networking summit? >> So OpenStack itself is a multipurpose generated cloud platform, so we are not just looking into enterprise, IT use cases, but also trying to address the telecom and NFV space. And this is the conference where we are finding many of our ecosystem member companies represented, and we are also learning what's new in the networking space, what are the challenges of tomorrow and how we can start to address them today. >> Right, 'cause the telco is a very active space for OpenStack as well, correct, there's been a good market segment for you. >> Yes, it is an emerging area. I would say we have more and more telecommunications company around and they are also more and more involved in open source. Because I think it's kind of clear that they are also using open source for a while now, but using open source and participating in open source, those are two different things. So this kind of mindset change and transition towards participating In these communities and going out to the public field and do software development there and collaborate with each other and the enterprise IT segment as well, this is what is happening today and it is really great to see it. >> Host: Great, great. >> And you've seen more and more telco's participating in the OpenStack summits, there was an NFV day, I think, even going all the way back to the Atlanta summit. And certainly, in Barcelona, Ildiko was actually doing one of the main stage key notes, which was very focused on telco. And some of the main sponsors of this upcoming summit are telco's. So there's definitely a nice energy between telco and OpenStack. >> Now, why do you think the telco is just the one that's kind of getting ahead of the curve in terms of the adoption? >> Scalable low class clouds. (all laugh) >> Right, and we had John Donovan from AT&T said today that they're either rapidly approaching or going to hit, very soon, more than 50% of software defined networking within the AT&T network. So if there's any questions as to whether it's real or still in POC's, I think that pretty much says it's in production and running. >> I'm doing a lot more of that, so I also run the OpenStack user group for the San Francisco bay area and have been for the last three years, and if we're not talking about Kupernetes, or Docker and OpenStack, we're talking about networking. And tonight, actually, we're going to, the open contrail team is talking about some of the stuff they're doing with open contrail and containers and sort of just to piggyback off of this conference. And next week, as well, we're talking about the network functionality in Kupernetes at OpenStack, if you want to run in down to the OpenStack cloud. So it's a huge focus and the user group can't get enough of it. >> and your guys' show is coming up very, very soon. >> The OpenStack summit? >> Yes. >> Oh, absolutely, May 8th through 11th in Boston, Massachusetts. >> Host: Like right around the corner. >> Yeah. >> The incredible moving show, right? It keeps going and going and going. >> Yeah, yeah, there's going to be 6,000 plus people there. There was just some recent press releases about some of the keynotes that are happening there. There's a huge focus on, you know, I keep calling this the year of the user, the year of OpenStack adoption. And we're really, throughout the meetups, we're really doing a lot to try to showcase those use cases. So Google will be one that's onstage talking about some really cool stuff they're doing with OpenStack, some machine learning, just really intelligent stuff they're working on, and that's going to be a great keynote that we're looking forward to. Harvard will be up on there, you know, not just big name foundation members, but a lot of use cases that you'll see presented. >> So why do you think this is the year, what's kind of the breakthrough that it is the year of the user, would you say? >> Well, I think that just the reliability of OpenStack. I think enterprises are getting more comfortable. There are very large clouds running on OpenStack, more in Asia and in Europe and Ildiko can probably talk about it, particularly some of the telco related ones. But you know, the adoption is there and you see more stability around there, more integration with other, I don't know what to call it, emerging technologies like containers, like AI, like IOT. So there's a big push there, but I think enterprises have just, they have adopted it. And there's more expertise out there. We've focused a lot on the administrators. There's the COA, the certified administrator of, you know, OpenStack administrator exam you can take. So the operators have come a long way and they're really helping the customers out there get OpenStack clouds up and running. So I just think, you know, it's seven years now, into it, right, so we got to turn the corner. >> So there have been some growing pains with OpenStack, so what can you tell us about the metrics today versus, say, three or four years ago in terms of total installations, maybe breakdown of telecom versus enterprise, what kind of metrics do you have you there? >> I'll let you take that one. >> We are running, continuously running a user survey and we are seeing growing numbers in the telecom area. I'm not prepared with the numbers from the top of my head, but we are definitely seeing more and more adoption in the telecom space like how you mentioned AT&T, they are one of the largest telecom operators onboard in the community, and they are also very active, showing a pretty great example of how to adopt the software and how to participate in the community to make the software more and more NFV ready and ready for the telecom use cases. We also have, as Lisa-Marie just mentioned, the China area and Asia are coming up as well, like we have China Mobile and China Telecom onboard as well. Or Huawei, so we have telecom operators and telecom vendors as well, around the community. And we are also collaborating with other communities, so like who you see around OPNFV, OpenDaylight, and so forth. We are collaborating with them to see how we can integrate OpenStack into a larger environment as part of the full NFV stack. If you look into the ETSI NFV architectural framework, OpenStack is on the infrastructure layer. The NFV infrastructure and virtual infrastructure manager components are covered with OpenStack services mostly. So you also need to look into, then, how you can run on top of the hardware that the telecom industry is expecting in a data center and how to onboard the virtual network functions on top of that, how to put D management and orchestration components on top of OpenStack, and how the integration works out. So we are collaborating with these communities and what is really exciting about the Upcoming summit is that we are transforming the event a little bit. So this time, it will not be purely OpenStack focused, but it will be more like an open infrastructure, even. We are running open source days, so we will have representation from the communities I mentioned and we will also have Kubernetes onboard, for example, to show how we are collaborating with the representatives of the container technologies. We will also have Cloud Foundry and a few more communities around, so it will be a pretty interesting event and we are just trying to show the big picture that how OpenStack and all these other components of this large ecosystem are operating together. And that is going to be a super cool part of the summit, so the summit is May 8th through 11th and on May 9th, the CNCF, the Linux foundation, actually, behind this, the CNCF day, they're calling it Kupernetes day. And the whole day will be dedicated, there will be a whole track dedicated to Kupernetes, basically. And so they did another call for papers and it's like a little mini conference inside the conference. So that's kind of what I was saying about the adoption of other technologies. I'm sure the OpenStack foundation is putting those numbers together that you asked about and probably Jonathan or Bryce will stand onstage on the first day and talk about them. But what I think is more interesting and what I would encourage people to go, there's a Superuser magazine. Superuser does a great job telling the stories of what's happening out there, and some of these use cases, and who's adopting this technology and what they're doing with it. And those stories are more interesting than just, you know, the numbers. Because you can do anything with numbers and statistics, but these actual user stories are really cool so I encourage readers to go out to Superuser magazine and check that out. >> It's like, Lego uses it. >> There you go. >> I had to check real fast. >> Lot of information on there. They do a good job of that. >> Lego alligators. >> So you talked about this day with the Linux foundation, is there increasing amounts of cooperation between OpenStack and Linux foundation? Given all the projects that seem to be blossoming. >> Yeah, I don't even know that it needed to increase, there's always been nice energy between the two. There is, you know, Eileen Evans, who we know very well, was on the board of both, the first woman on both boards. She was my colleague for many years at Hewlett-Packard. She's still on the Linux foundation board and there's been a lot of synergy between those foundations. They've always worked closely together, especially things like the Cloud Foundry foundation that came out of the Linux foundation has always worked very closely with OpenStack, the OpenStack foundation, and the board members, and it's all one big happy family. We're all open source, yeah. >> And you talked about the enterprises being, you know, they've been using open source for a long time, Linux has been around forever. They're really more adopting kind of an open source ethos in terms of their own contributions back and participating back in. So you see just increased adoption, really, of using the open source vehicle as a way to do better innovation, better product development, and to get involved, get back to their engineers to get involved in something beyond just their day job. >> It is definitely a tendency that is happening, so it's not just AT&T, like, I can mention, for example, NTT DoCoMo, who now has engineers working on OpenStack code. They are a large operator in Japan. And it is really not something, I think, that a few years back, they would've imagined that they will just participate in an open source community. I've been involved with OPNFV for, I think, two years now, or two and a half. I'm an OPNFV ambassador as well, I'm trying to focus on the cross-community collaboration. And OPNFV is an environment where you can find many telecom operators and vendors. And it was a really interesting journey to see them, how they get to know open source more and more and how they learned how this is working and how working in public is like and what the benefits are. And I remember when a few people from, for example, DoCoMo came to OPNFV and they were, like, a little bit more shy, just exploring what's happening. And then like a half year later when they started to do OpenStack contributions, they had code batches merged into OpenStack, they added new functionalities, they kind of became advocates of open source. And they were like telling everywhere that open source is the way to go and this is what everyone should be doing and why it is so great to collaborate with other operators out in the public so you can address the common pain points together, rather than everyone is working on it behind closed doors and trying to invent the same wheel at the same time, separately. >> Right. >> So that was a really, really Interesting journey. And I think more and more companies are following this example. And not just coming and giving feedback, but also more and more participating and doing coding documentation work in the community. >> And I think if I can understand, what I think, also, the question you might have been asking, there wasn't a ton of python developers in the beginning and everybody's like how do we get these OpenStack developers in the company, you know, it was this huge shortage. And Linux was the little hanging fruit, it's like well, why do we just hire some Linux developers and then teach them python, and that's how a lot of OpenStack knowledge came into companies. So that was the trend. And I think enough companies, enough enterprises do see the value of something like OpenStack or Linux or Kupernetes or whatever the project has, Docker, to actually dedicate enough full time employees to be doing just that for as long as it makes sense and then maybe it's another technology. But we saw that for years, right, with OpenStack, huge companies. And there still are. Not always the same companies, depending on what a company needs and where they are, they absolutely find value in contributing back to this community. >> Okay, and you said you got a meetup tonight? >> I do, yeah. >> Give a plug for the meetup. >> Juniper, it's open contrail talking about open contrailing and containers. And it's at Juniper here in Sunnyville, so if you go to meetup.com/openstack, that's our user group. We're the first ones, we got that one. So meetup.com/openstack is the Silicon Valley, San Francisco bay area user group. And then next week, we're talking about networking and Kupernetes. >> All right, it's always good to be above the fold, that's for sure. All right, Ildiko, Lisa-Marie, great to see you again and thanks for stopping by, and we'll see you in Boston, if not before. >> Absolutely, we'll both be quite busy, we have four, both four presentations each, it's going to be a nutty week. So I'm looking forward to seeing you guys in Boston, always a pleasure, thanks for inviting us. >> Absolutely, all right, thanks for stopping by. With Scott Raynovich, I'm Jeff Frick, you're watching The Cube from open networking summit 2017. We'll be back after this short break, thanks for watching.