>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now here are your hosts, Dave Vellante and Stu Miniman. >> Hi everybody, Dave Vellante here with Stu Miniman. We're here to unpack the recent acquisition that IBM announced of Red Hat. $34 billon acquisition financed with cash and debt. And Stu, let me get us started. Why would IBM spend $34 billion on Red Hat? Its largest acquisition to date of a software company had been Cognos at $5 billion. This is a massive move. IBM's Ginni Rometty called this a game changer. And essentially, my take is that they're pivoting. Their public cloud strategy was not living up to expectations. They're pivoting to hybrid cloud. Their hybrid cloud strategy was limited because they didn't really have strong developer mojo, their Bluemix PaaS layer had really failed. And so they really needed to make a big move here, and this is a big move. And so IBM's intent, and Ginni Rometty laid out the strategy, is to become number one in hybrid cloud, the undisputed leader. And so we'll talk about that. But Stu, from Red Hat's perspective, it's a company you're very close to and you've observed for a number of years, Red Hat was on a path touting a $5 billion revenue plan, what happened? Why would they capitulate? >> Yeah Dave, on the face of it, Red Hat says that IBM will help it further its mission. We just listened to Arvin Krishna from IBM talking with Paul Cormier at Red Hat, and they talked about how they were gonna keep the Red Hat brand alive. IBM has a long history with open source. As you mentioned, I've been working with Red Hat, gosh, almost 20 years now, and we all think back to two decades ago, when IBM put a billion dollars into Linux and really pushed on open source. So these are not strangers, they know each other really well. Part of me looks at these from a cynicism standpoint. Somebody on Twitter said that Red Hat is hitting it at the peak of Kubernetes hype. And therefore, they're gonna get maximum valuation for where the stock is. Red Hat has positioned itself rather well in the hybrid cloud world, really the multicloud world, when you go to AWS, when you go to the Microsoft Azure environment, you talk to Google. Open source fits into that environment and Red Hat products specifically tie into those environments. Remember last year, in Boston, there's a video of Andy Jassy talking about a partnership with Red Hat. This year, up on stage, Microsoft with Azure partnering deeply with Red Hat. So Red Hat has done a nice job of moving beyond Linux. But Linux is still at its core. There definitely is concern that the operating system is less important today than it was in the past. It was actually Red Hat's acquisition of CoreOS for about $250 million earlier this year that really put a fine point on it. CoreOS was launched to be just enough Linux to live in this kind of container and Kubernetes world. And Red Hat, of course, like we've seen often, the company that is saying, "We're going to kill you", well you go and you buy them. So Red Hat wasn't looking to kill IBM, but definitely we've seen this trend of softwares eating the world, and open sources eating software. So IBM, hopefully, is a embracing that open source ethos. I have to say, Dave, for myself, a little sad to see the news. Red Hat being the paragon of open source. The one that we always go to for winning in this space. So we hope that they will be able to keep their culture. We've had a chance, many times, to interview Jim Whitehurst, really respected CEO. One that we think should stay involved in IBM deeply for this. But if they can keep and grow the culture, then it's a win for Red Hat. But still sorting through everything, and it feels like a little bit of a capitulation that Red Hat decides to sell off rather than keep its mission of getting to five billion and beyond, and be the leading company in the space. >> Well I think it is a bit of a capitulation. Because look, Red Hat is roughly a $3 billion company, growing at 20% a year, had that vision of five billion Its stock, in June, had hit $175. So while IBM's paying a 60% premium off of its current price, it's really only about 8 or 9% higher than where Red Hat was just a few months ago. And so I think, there's an old saying on Wall Street, the first disappointment is never the last. And so I think that Red Hat was looking at a long slog. They reduced expectations, they guided lower, and they were looking at the 90-day shot clock. And this probably wasn't going to be a good 'nother couple of years for Red Hat. And they're selling at the peak of the market, or roughly the peak of the market. They probably figured, hey, the window is closing, potentially, to do this deal. Maybe not such a bad time to get out, as opposed to trying to slog it out. Your thoughts. >> Yeah, Dave, I think you're absolutely right. When you look at where Red Hat is winning, they've done great in OpenStack but there's not a lot of excitement around OpenStack. Kubernetes was talked about lots in the announcement, in the briefings, and everything like that. I was actually surprised you didn't hear as much about just the core business. You would think you would be hearing about all the companies using Red Hat Enterprise Linux around the world. That ratable model that Red Hat really has a nice base of their environment. It was talking more about the future and where Kubernetes, and cloud-native, and all of that development will go. IBM has done middling okay with developers. They have a strong history in middleware, which is where a lot of the Red Hat development activity has been heading. It was interesting to hear, on the call, it's like, oh well, what about the customers that are using IBM too say, "Oh well, if customers want that, we'll still do it." What about IBM with Cloud Foundry? Well absolutely, if customers wanna still be doing it, they'll do that. So you don't hear the typical, "Oh well, we're going to take Red Hat technology "and push it through all of IBM's channel." This is in the IBM cloud group, and that's really their focus, as it is. I feel like they're almost limiting the potential for growth for Red Hat. >> Well so IBM's gonna pay for this, as I said, it's an all cash deal. IBM's got about 14 and a half billion dollars on the balance sheet. And so they gotta take out some debt. S&P downgraded IBM's rating from an A+ to an A. And so the ratings agency is going to be watching IBM's growth. IBM said this will add 200 basis points of revenue growth over the five year CAGR. But that means we're really not gonna see that for six, seven years. And Ginni Rometty stressed this is not a backend loaded thing. We're gonna find revenue opportunities through cross-selling and go-to-market. But we have a lot of questions on this deal, Stu. And I wanna sorta get into that. So first of all, again, I think it's the right move for IBM. It's a big move for IBM. Rumors were that Cisco might have been interested. I'm not sure if Microsoft was in the mix. So IBM went for it and, as I said, didn't pay a huge premium over where their stock was back in June. Now of course, back in June, the market was kind of inflated. But nonetheless, the strategy now is to go multi-cloud. The number one in the multi-cloud world. What is that multi-cloud leadership? How are we gonna measure multi-cloud? Is IBM, now, the steward of open source for the industry? To your point earlier, you're sad, Stu, I know. >> You bring up a great point. So I think back to three years ago, with the Wikibon we put together, our true private cloud forecast. And when we built that, we said, "Okay, here's the hardware, and software, "and services in private cloud." And we said, "Well let's try to measure hybrid cloud." And we spent like, six months looking at this. And it's like, well what is hybrid cloud? I've got my public cloud pieces, and I've got my private cloud pieces. Well there's some management layers and things that go in between. Do I count things like PaaS? So do you save people like Pivotal and Red Hat's OpenShift? Are those hybrid cloud? Well but they live either here or there. They're not usually necessarily helping with the migration and moving around. I can live in multiple environments. So Linux and containers live in the public, they live in the private, they don't just fly around in the ether. So measuring hybrid cloud, I think is really tough. Does IBM plus Red Hat make them a top leader in this hybrid multi-cloud world? Absolutely, they should be mentioned a lot more. When I go to the cloud shows, the public cloud shows, IBM isn't one of the first peak companies you think about. Red Hat absolutely is in the conversation. It actually should raise the profile of Red Hat because, while Red Hat plays in a lot of the conversations, they're also not the first company that comes to mind when you talk about them. Microsoft, middle of hybrid cloud. Oracle, positioning their applications in this multi-cloud world. Of course you can't talk about cloud, any cloud, without talking about Amazon's position in the marketplace. And SAS is the real place that it plays. So IBM, one of their biggest strengths is that they have applications. Dave, you know the space really well. What does this mean vis-à-vis Oracle? >> Well let's see, so Oracle, I think, is looking at this, saying, alright. I would say IBM is Oracle's number one competitor in the enterprise. You got SAP, and Amazon obviously in cloud, et cetera, et cetera. But let me put it this way, I think Oracle is IBM's number one competitor. Whether Oracle sees it that way or not. But they're clearly similar companies, in terms of their vertical integration. I think Oracle's looking at this, saying, hey. There's no way Oracle was gonna spend $34 billion on Red Hat. And I don't think they were interested in really spending any money on the alternatives. But does this put Canonical and SUSE in play? I think Oracle's gonna look at this and sort of message to its customers, "We're already number one in our world in hybrid cloud." But I wanna come back to the deal. I'm actually optimistic on the deal, from the standpoint of, I think IBM had to make a big move like this. Because it was largely just bumping along. But I'm not buying the narrative from Jim Whitehurst that, "Well we had to do this to scale." Why couldn't they scale with partners? I just don't understand that. They're open. This is largely, to me, a services deal. This is a big boon for IBM Services business. In fact, Jim Whitehurst, and Ginni even said that today on the financial analyst call, Jim said, "Our big constraint was "services scale and the industry expertise there." So what was that constraint? Why couldn't they partner with Accenture, and Ernie Young, and PwC, and the likes of Deloitte, to scale and preserve greater independence? And I think that the reason is, IBM sees an opportunity and they're going hard after it. So how will, or will, IBM change its posture relative to some of those big services plays? >> Yeah, Dave, I think you're absolutely right there. Because Red Hat should've been able to scale there. I wonder if it's just that all of those big service system integrators, they're working really closely with the public cloud providers. And while Red Hat was a piece of it, it wasn't the big piece of it. And therefore, I'm worried on the application migration. I'm worried about the adoption of infrastructure as a service. And Red Hat might be a piece in the puzzle, but it wasn't the driver for that change, and the move, and the modernization activities that were going on. That being said, OpenShift was a great opportunity. It plays in a lot of these environments. It'll be really interesting to see. And a huge opportunity for IBM to take and accelerate that business. From a services standpoint, do you think it'll change their position with regard to the SIs? >> I don't. I think IBM's gonna try to present, preserve Red Hat as an independent company. I would love to see IBM do what EMC did years ago with VMware, and float some portion of the company, and truly have it at least be quasi-independent. With an independent operating structure, and reporting structure from the standpoint of a public company. That would really signal to the partners that IBM's serious about maintaining independence. >> Yeah now, look Dave, IBM has said they will keep the brand, they will keep the products. Of all the companies that would buy Red Hat, I'm not super worried about kinda polluting open source. It was kinda nice that Jim Whitehurst would say, if it's a Red Hat thing, it is 100% open source. And IBM plays in a lot of these environments. A friend of mine on Twitter was like, "Oh hey, IBM's coming back to OpenDaylight or things like that." Because they'd been part of Cloud Foundry, they'd been part of OpenDaylight. There's certain ones that they are part of it and then they step back. So IBM, credibly open source space, if they can let Red Hat people still do their thing. But the concern is that lots of other companies are gonna be calling up project leads, and contributors in the open source community that might've felt that Red Hat was ideal place to live, and now they might go get their paycheck somewhere else. >> There's rumors that Jim Whitehurst eventually will take over IBM. I don't see it, I just don't think Jim Whitehurst wants to run Z mainframes and Services. That doesn't make any sense to me. Ginni's getting to the age where IBM CEOs typically retire, within the next couple of years. And so I think that it's more likely they'll bring in somebody from internally. Whether it's Arvin or, more likely, Jim Kavanaugh 'cause he's got the relationship with Wall Street. Let's talk about winners and losers. It's just, again, a huge strategic move for IBM. Frankly, I see the big winners is IBM and Red Hat. Because as we described before, IBM was struggling with its execution, and Red Hat was just basically, finally hitting a wall after 60-plus quarters of growth. And so the question is, will its customers win? The big concern I have for the customers is, IBM has this nasty habit of raising prices when it does acquisitions. We've seen it a number of times. And so you keep an eye on it, if I were a Red Hat customer, I'd be locking in some attractive pricing, longterm. And I would also be calling Mark Shuttleworth, and get his take, and get that Amdahl coffee cup on my desk, as it were. Other winners and losers, your thoughts on some of the partners, and the ecosystem. >> Yeah, when I look at this and say, compare it to Microsoft buying GitHub. We're all wondering, is this a real game changer for IBM? And if they embrace the direction. It's not like Red Hat culture is going to just take over IBM. In the Q&A with IBM, they said, "Will there be influence? Absolutely. "Is this a marriage of equals? No. "We're buying Red Hat and we will be "communicating and working together on this" But you can see how this can help IBM, as to the direction. Open source and the multi-cloud world is a huge, important piece. Cisco, I think, could've made a move like this. I would've been a little bit more worried about maintaining open source purity, if it was somebody like Cisco. There's other acquisitions, you mentioned Canonical and SUSE are out there. If somebody wanted to do this, the role of the operating system is much less important than it is today. You wouldn't have seen Microsoft up on stage at Red Hat Summit this year if Windows was the driver for Microsoft going forward. The cloud companies out there, to be honest, it really cements their presence out there. I don't think AWS is sitting there saying, "Oh jeez, we need to worry." They're saying, "Well IBM's capitulated." Realizing that, "Sure they have their own cloud, "and their environment, but they're going to be "successful only when they live in, "and around, and amongst our platform of Amazon." And Azure's gonna feel the same way, and same about Google. So there's that dynamic there. >> What about VMware? >> So I think VMware absolutely is a loser here. When I went back to say one of the biggest strengths of IBM is that they have applications. When you talk about Red Hat, they're really working, not only at the infrastructure layer, but working with developers, and working in that environment. The biggest weakness of VMware, is they don't own the applications. I'm paying licenses to VMware. And in a multi-cloud world, why do I need VMware? As opposed to Red Hat and IBM, or Amazon, or Microsoft, have a much more natural affinity for the applications and the data in the future. >> And what about the arms dealers? HPE and Dell, in particular, and of course, Lenovo. Wouldn't they prefer Red Hat being independent? >> Absolutely, they would prefer that they're gonna stay independent. As long as it doesn't seem to customers that IBM is trying to twist everybody's arms, and get you on to Z, or Power, or something like that. And continues to allow partnerships with the HPEs, Dells, Lenovos of the world. I think they'll be okay. So I'd say middling to impact. But absolutely, Red Hat, as an independent, was really the Switzerland of the marketplace. >> Ginni Rometty had sited three growth areas. One was Red Hat scale and go-to-market. I think there's no question about that. IBM could help with Red Hat's go-to-market. The other growth vector was IBM's products and software on the Red Hat stack. I'm less optimistic there, because I think that it's the strength of IBM's products, in and of themselves, that are largely gonna determine that success. And then the third was Services. I think IBM Services is a huge winner here. Having the bat phone into Red Hat is a big win for IBM Services. They can now differentiate. And this is where I think it's gonna be really interesting to see the posture of Accenture and those other big guys. I think IBM can now somewhat differentiate from those guys, saying, "Well wait, "we have exclusive, or not exclusive, "but inside baseball access to Red Hat." So that's gonna be an interesting dynamic to watch. Your final thoughts here. >> Yeah, yeah, Dave, absolutely. On the product integration piece, the question would be, you're gonna have OpenAPIs. This is all gonna work with the entire ecosystem. Couldn't IBM have done more of this without having to pay $34 billion and put things together? Services, absolutely, will be the measurement as to whether this is successful or not. That's probably gonna be the line out of them in financials, that we're gonna have to look at. Because, Dave, going back to, what is hybrid, and how do we measure it? What is success for this whole acquisition down the line? Any final pieces to what we should watch and how we measure that? >> So I think that, first of all, IBM's really good with acquisitions, so keep an eye on that. I'm not so concerned about the debt. IBM's got strong free cash flow. Red Hat throws off a billion dollars a year in free cash flow. This should be an accretive acquisition. In terms of operating profits, it might take a couple of years. But certainly from a standpoint of free cash flow and revenue growth, I think it's gonna help near-term. If it doesn't, that's something that's really important to watch. And then the last thing is culture. You know a lot of people at these companies. I know a lot of people at these companies. Look, the Red Hat culture drinks the Kool-Aid of open. You know this. Do they see IBM as the steward of open, and are they gonna face a brain drain? That's why it's no coincidence that Whitehurst and Rometty were down in North Carolina today. And Arvin and Paul Cormier were in Boston today. This is where a lot of employees are for Red Hat. And they're messaging. And so that's very, very important. IBM's not foolish. So that, to me, Stu, is a huge thing, is the culture. Dave, IBM is no longer the navy suit with the red tie, and everybody buttoned down. People are concerned about like, oh, IBM's gonna give the Red Hat people a dress code. Sure, the typical IBMer is not in a graphic tee and a hoodie. But, Dave, you've seen such a transformation in IBM over the last couple of decades. >> Yeah, definitely. And I think this really does, in my view, cement, now, the legacy of Ginny Rometty, which was kinda hanging on Watson, and Cognitive, and this sort of bespoke set of capabilities, and the SoftLayer acquisition. It, now, all comes together. This is a major pivot by IBM. I think, strategically, it's the right move for IBM. And I think, if in fact, IBM can maintain Red Hat's independence and that posture, and maintain its culture and employee base, I think it does change the game for IBM. So I would say, smart move, good move. Expensive but probably worth it. >> Yeah, where else would they have put their money, Dave? >> Yeah, right. Alright, Stu, thank you very much for unpacking this announcement. And thank you for watching. We'll see you next time. (mellow electronic music)

>>From around the globe. If the cube with digital coverage of AWS reinvent 20, 20 special coverage sponsored by AWS worldwide public sector. >>Okay. Welcome back everyone. To the cubes, virtual coverage of AWS reinvent 2020, this is the cube virtual. I'm your host John farrier with the cube. The cube normally is there in person this year. It's all virtual. This is the cube virtual. We're doing the remote interviews and we're bringing in commentary and discussion around the themes of re-invent. And this today is public sector, worldwide public sector day. And the theme from Teresa Carlson, who heads up the entire team is to think big and look at the data. And I wanted to bring in a special cube alumni and special guests. Alan Cohen. Who's a partner at data collective venture capital or DCVC, um, which we've known for many, many years, founders, Matt OCO and Zachary Bogue, who started the firm, um, to over at about 10 years ago. We're on the really the big data wave and have grown into a really big firm thought big data, data, collective big ideas. That's the whole purpose of your firm. Alan. You're now a partner retired, retired, I mean a venture capitalist over at being a collective. Great to see you. Thanks for coming on. >>Great to see you as well. John, thanks for being so honest this morning. >>I love to joke about being retired because the VC game, it's not, um, a retirement for you. You guys made, you made some investments. Data collective has a unique, um, philosophy because you guys invest in essentially moonshots or big ideas, hard problems. And if I look at what's going on with Amazon, specifically in the public sector, genome sequencing now available in what they call the open data registry. You've got healthcare expanding, huge, you got huge demand and education, real societal benefits, uh, cybersecurity contested in space, more contention and congestion and space. Um, there's a lot of really hard science problems that are going on at the cloud. And AI are enabling, you're investing in entrepreneurs that are trying to solve these problems. What's your view of the big ideas? What are people missing? >>Well, I don't know if they're missing, but I think what I'd say, John, is that we're starting to see a shift. So if you look at the last, I don't know, forever 40, 50 years in the it and the tech industry, we took a lot of atoms. We built networks and data warehouses and server farms, and we, we kind of created software with it. So we took Adam's and we turned them into bets. Now we're seeing things move in the other direction where we're targeting bits, software, artificial intelligence, massive amount of compute power, which you can get from companies like, like AWS. And now we're creating better atoms. That means better met medicines and vaccines we're investor, um, and a company called abs Celera, which is the therapeutic treatment that J and J has, um, taken to market. Uh, people are actually spaces, a commercial business. >>If it's not a science fiction, novel we're investors in planet labs and rocket labs and compel a space so people can see right out. So you're sitting on your terrorists of your backyard from a satellite that was launched by a private company without any government money. Um, you talked about gene sequencing, uh, folding of proteins. Um, so I think the big ideas are we can look at some of the world's most intractable issues and problems, and we can go after them and turn them into commercial opportunities. Uh, and we would have been able to do that before, without the advent of big data and obviously the processing capabilities and on now artificial intelligence that are available from things like AWS. So, um, it's kind of, it's kind of payback from the physical world to the physical world, from the virtual world. Okay. >>Pella space was featured in the keynote by Teresa Carlson. Um, great to tie that in great tie in there, but this is the kind of hard problems. And I want to get your take because entrepreneurs, you know, it reminds me of the old days where, you know, when you didn't go back to the.com, when that bubble was going on, and then you got the different cycles and the different waves, um, the consumer always got the best kind of valuations and got the most attention. And now B to B's hot, you got the enterprise is super hot, mainly because of Amazon >>Sure. Into the Jordash IPO. Obviously this morning, >>Jordache IPO, I didn't get a phone call for friends and family and one of their top customers. They started in Palo Alto. We know them since the carton Jordache, these are companies that are getting massive, uh, zoom. Um, the post pandemic is coming. It's going to be a hybrid world. I think there's clear recognition that this some economic values are digital being digitally enabled and using cloud and AI for efficiencies and philosophy of new things. But it's going to get back to the real world. What's your, it's still hard problems out there. I mean, all the valuations, >>Well, there's always hard problems, but what's different now. And from a perspective of venture and, and investors is that you can go after really hard problems with venture scale level of investments. Uh, traditionally you think about these things as like a division of a company like J and J or general electric or some very massive global corporation, and because of the capabilities that are available, um, in the computing world, um, as well as kind of great scientific research and we fund more PhDs probably than any other, uh, any other type of background, uh, for, for founders, they can go after these things, they can create. Uh, we, uh, we have a company called pivot bio, uh, and I think I've spoken to you about them in the past, Sean, they have created a series of microbes that actually do a process called nitrogen fixation. Um, so it attaches the nitrogen to the roots of corn, sorghum and wheat. >>So you don't have to use chemical fertilizer. Well, those microbes were all created through an enormous amount of machine learning. And where did that machine learning come from? So what does that mean? That means climate change. That means more profitable farmers. Uh, that means water and air management, all major issues in our society where if we didn't have the computing capabilities we have today, we wouldn't have been able to do that. We clearly would have not been able to do that, um, as a venture level of investments to get it started. So I think what's missing for a lot of people is a paucity of imagination. And you have to actually, you know, you actually have to take these intractable problems and say, how can I solve them and then tear it apart to its actual molecules, just the little inside joke, right? And, and then move that through. >>And, you know, this means that you have to be able to invest in work on things. You know, these companies don't happen in two or three years or five years. They take sometimes seven, 10, 15 years. So it's life work for people. Um, but though, but we're seeing that, uh, you know, that everywhere, I mean, rocket lab, a company of ours out of New Zealand and now out of DC, which we actually launched the last couple of space, um, satellites, they print their rocket engines with a 3d printer, a metal printer. So think about that. How did all that, that come to bear? Um, and it started as a dangerous scale style of investments. So, you know, Peter Beck, the founder of that company had a dream to basically launch a rocket, you know, once a year, once a month, once a week, and eventually to once a day. So he's effectively creating a huge, um, huge upswing in the ability of people to commercialize space. And then what does space do? It gives you better observability on the planet from a, not just from a security point of view, but from a weather and a commerce point of view. So all kinds of other things that looked like they were very difficult to go after it now starts to become enabled. Yeah. >>I love the, uh, your investment in Capella space because I think that speaks volumes. And one of the things that the founder was talking about was getting the data down is the hard part. He he's up, he's up there now. He can see everything, but now I've got to get the data down because say, say the wildfires in California, or whether, um, things happening around the globe now that you have the, uh, the observation space, you got to get the data down there. This is the huge scale challenge. >>Well, let me, let me, let me give you something. That's also, so w you know, we are in a fairly difficult time in this country, right? Because of the covert virus, uh, we are going to maybe as quickly as next week, start to deliver, even though not as many as we'd like vaccines and therapeutics into this virus situation, literally in a year, how did all these things, I mean, obviously one of the worst public health crisis of our lifetimes, and maybe, you know, uh, of the past century, uh, how did that happen? How did it all day? Well, you know, some, I mean, the ability to use, um, computing power in, in assistance, in laboratory, in, in, uh, in, um, development of, of pharmaceutical and therapeutics is a huge change. So something that is an intractable problem, because the traditional methods of creating vaccines that take anywhere from three to seven years, we would have a much worse public health crisis. I'm not saying that this one is over, right. We're in a really difficult situation, but our ability to start to address it, the worst public health crisis in our lifetime is being addressed because of the ability of people to apply technology and to accelerate the ability to create vaccines. So great points, absolutely amazing. >>Let's just, let's just pause that let's double down on that and just unpack that, think about that for a second. If you didn't, and then the Amazon highlight is on Andy Jesse's keynote carrier, which makes air conditioning. They also do refrigeration and transport. So one IOT application leveraging their cloud is they may call it cold chain managing the value chain of the transport, making sure food. And in this case vaccine, they saw huge value to reduce carbon emissions because of it does the waste involved in food alone was a problem, but the vaccine, they had the cold, the cold, cold, cold chain. Can you hear me? >>Maybe this year, the cold chain is more valuable than the blockchain. Yeah. >>Cold don't think he was cold chain. Sounds like a band called play. Um, um, I had to get that in and Linda loves Coldplay. Um, but if you think about like where we are to your point, imagine if this hit 15 years ago or 20 years ago, um, you know, YouTube was just hitting the scene 20 years ago, 15 years ago, you know, so, you know, that kind of culture, we didn't have zoom education would be where we would be Skyping. Um, there's no bandwidth. So, I mean, you, you know, the, the bandwidth Wars you would live through those and your career, you had no bandwidth. You had no video conferencing, no real IOT, no real supply chain management and therapeutics would have taken what years. What's your reaction to, to that and compare and contrast that to what's on full display in the real world stage right now on digital enablement, digital transformation. >>Well, look, I mean, ultimately I'm an optimist because of what this technology allows you to do. I'm a realist that, you know, you know, we're gonna lose a lot of people because of this virus, but we're also going to be able to reduce a lot of, um, uh, pain for people and potentially death because of the ability to accelerate, um, these abilities to react. I think the biggest and the, the thing that I look for and I hope for, so when Theresa says, how do you think big, the biggest lesson I think we're going to we've learned in the last year is how to build resilience. So all kinds of parts of our economy, our healthcare systems, our personal lives, our education, our children, even our leisure time have been tested from a resilience point of view and the ability of technology to step in and become an enabler for that of resilience. >>Like there isn't like people don't love zoom school, but without zoom school, what we're going to do, there is no school, right? So, which is why zoom has become an indispensable utility of our lives, whether you're on a too much, or you've got zoom fatigue, does it really matter the concept? What we're going to do, call into a conference call and listen to your teacher, um, right in, you know, so how are you going to, you're going to do that, the ability to repurpose, um, our supply chain and, you know, uh, we, we, we see this, we're going to see a lot of change in the, in the global supply chain. You're going to see, uh, whether it's re domestication of manufacturing or tightening of that up, uh, because we're never going to go without PPE again, and other vital elements. We've seen entire industries repurposed from B2B to B to C and their ability to package, deliver and service customers. That is, those are forms of resilience. >>And, and, and, and taking that to the next level. If you think about what's actually happening on full display, and again, on my one-on-one with Andy Jassy prior to the event, and he laid this out on stage, he kind of talks about this, every vertical being disrupted, and then Dr. Matt wood, who's the machine learning lead there in Swami says, Hey, you know, cloud compute with chips now, and with AI and machine learning, every industry, vertical global industry is going to be disrupted. And so, you know, I get that. We've been saying that in the queue for a long time, that that's just going to happen. So we've been kind of on this wave of horizontal, scalability and vertical specialization with data and modern applications with machine learning, making customization really high-fidelity decisions. Or as you say, down to the molecule level or atomic level, but this is clear what, what I found interesting. And I want to get your thoughts because you have one been there, done that through many ways of innovation and now investor leading investor >>Investor, and you made up a word. I like it. Okay. >>Jesse talks about leadership to invent and reinvent. Can't fight gravity. You've got to get talent hungry for invention, solve real-world problems. Speed. Don't complexify. That's his message. I said to him, in my interview, you need a wartime conciliary cause he's a big movie buff. I quote the godfather. Yeah. Don't you don't want to be the Tom Hagen. You don't want to be that guy, right? You're not a wartime. Conciliary this is a time there's times in companies' histories where there's peace and there's wartime, wartime being the startup, trying to find its way. And then they get product market fit and you're growing and scaling. You're operating, you're hiring people to operate. Then you get into a pivot or a competitive situation. And then you got to get out there and, and, and get dirty and reinvent or re-imagine. And then you're back to peace. Having the right personnel is critical. So one of the themes this year is if you're in the way, get out of the way, you know, and some people don't want to hold on to hold onto the past. That's the way we did it before I built this system. Therefore it has to work this way. Otherwise the new ways, terrible, the mainframe, we've got to keep the mainframe. So you have a kind of a, um, an accelerated leadership, uh, thin man mantra happening. What is your take on this? Because, >>Sorry. So if you're going to have your F R R, if you're going to, if you are going to use, um, mob related better for is I'll share one with you from the final season of the Soprano's, where Tony's Prado is being hit over the head with a bunch of nostalgia from one of his associates. And he goes, remember, when is the lowest form of conversation and which is iconic. I think what you're talking about and what Andy is talking about is that the thing that makes great leadership, and what I look for is that when you invest in somebody or you put somebody in a leadership position to build something, 50% of their experience is really important. And 50% of it is not applicable in the new situation. And the hard leadership initiative has to understand which 50 matters in which 50 doesn't matter. >>So I think the issue is that, yeah, I think it is, you know, lead follow or get out of the way, but it's also, what am I doing? Am I following a pattern for a, for a, for an, a, for a technology, a market, a customer base, or a set of people are managing that doesn't really exist anymore, that the world has moved on. And I think that we're going to be kind of permanent war time on some level we're going to, we're going to be co we're because I think the economy is going to shift. We're going to have other shocks to the economy and we don't get back to a traditional normal any time soon. Yep. So I, I think that is the part that leadership in, in technology really has to, would adopt. And it's like, I mean, uh, you know, the first great CEO of Intel reminded us, right. Then only the paranoid survive. Right. Is that it's you, some things work and some things don't work and that's, that's the hard part on how you parse it. So I always like to say that you always have to have a crisis, and if there is no crisis, you create the crisis. Yeah. And, you know, >>Sam said, don't let a good crisis go to waste. You know? Um, as a manager, you take advantage of the crisis. >>Yeah. I mean, look, it wouldn't have been bad to be in the Peloton business this year. Right, too. Right. Which is like, when people stayed home and like that, you know, you know, th that will fade. People will get back on their bikes and go outside. I'm a cyclist, but you know, a lot more people are going to look at that as an alternative way to exercise or exercising, then when it's dark or when the weather is inclement. So what I think is that you see these things, they go in waves, they crest, they come back, but they never come back all the way to where they were. And as a manager, and then as a builder in the technology industry, you may not get like, like, like, okay, maybe we will not spend as much time on zoom, um, in a year from now, but we're going to still spend a lot of time on zoom and it's going to still be very important. >>Um, what I, what I would say, for example, and I, and looking at the COVID crisis and from my own personal investments, when I look at one thing is clear, we're going to get our arms around this virus. But if you look at the history of airborne illnesses, they are accelerating and they're coming every couple of years. So being able to be in that position to, to more react, more rapidly, create vaccines, the ability to foster trials more quickly to be able to use that information, to make decisions. And so the duration when people are not covered by therapeutics or vaccines, um, short, and this, that is going to be really important. So that form of resilience and that kind of speed is going to happen again and again, in healthcare, right. There's going to be in, you know, in increasing pressure across that in part of the segment food supply, right. I mean, the biggest problem in our food supply today is actually the lack of labor. Um, and so you have far, I mean, you know, farmers have had a repurpose, they don't sell to their traditional, like, so you're going to see increased amount of optimization automation and mechanization. >>Lauren was on the, um, keynote today talking about how their marketplaces collected as a collective, you know, um, people were working together, um, given that, given the big ideas. Well, let's, let's just, as we end the segment here, let's connect big ideas. And the democratization of, I mean, you know, the old expression Silicon Valley go big or go home. Well, I think now we're at a time where you can actually go big and stay and, and, and be big and get to be big at your own pace because the, the mantra has been thinking big in years, execute plan in months and execute weekly and month daily, you know, you can plan around, there's a management technique potentially to leverage cloud and AI to really think about bit the big idea. Uh, if I'm a manager, whether I'm in public sector or commercial or any vertical industry, I can still have that big idea that North star and then work backwards and figure that out. >>That sounds to the Amazon way. What's your take on how people should be. What's the right way to think about executing down that path so that someone who's say trying to re-imagine education. And I know a, some people that I've talked to here in California are looking at it and saying, Hey, I don't need to have silos students, faculty, alumni, and community. I can unify them together. That's an idea. I mean, execution of that is, you know, move all these events. So they've been supplying siloed systems to them. Um, I mean, cause people want to interact online. The Peloton is a great example of health and fitness. So there's, there's everyone is out there waiting for this playbook. >>Yeah. Unfortunately I, I had the playbook. I'd mail it to you. Uh, but you know, I think there's a couple of things that are really important to do. Maybe good to help the bed is one where is there structural change in an industry or a segment or something like that. And sorry to just people I'm home today, right? It's, everybody's running out of the door. Um, and you know, so I talked about this structural change and you, we talked about the structural change in healthcare. We talked about kind of maybe some of the structural change that's coming to agriculture. There's a change in people's expectations and how they're willing to work and what they're willing to do. Um, you, as you pointed out the traditional silos, right, since we have so much information at our fingertips, um, you know, people's responsibility as opposed to having products and services to deliver them, what they're willing to do on their own is really changed. >>Um, I think the other thing is that, uh, leadership is ultimately the most important aspect. And we have built a lot of companies in the industry based on forms of structural relations industry, um, background, I'm a product manager, I'm a sales person, I'm a CEO, I'm a finance person. And what we're starting to see is more whole thinking. Um, uh, particularly in early stage investors where they think less functionally about what people's jobs are and more about what the company is trying to get done, what the market is like. And it's infusing a lot more, how people do that. So ultimately most of this comes down to leadership. Um, uh, and, and that's what people have to do. They have to see themselves as a leader in their company, in their, in the business. They're trying to build, um, not just in their function, but in the market they're trying to win, which means you go out and you talk to a lot more people. >>You do a lot, you take a lot fewer things for granted. Um, you read less textbooks on how to build companies and you spend more time talking to your customers and your engineers, and you start to look at enabling. So the, we have made between machine learning, computer vision, and the amount of processing power that's available from things like AWS, including the services that you could just click box in places like the Amazon store. You actually have to be much more expansive in how you think about what you can get done without having to build a lot of things. Cause it's actually right there at your fingertips. Hopefully that kind of gets a little bit to what you were asking. >>Well, Alan, it's always great to have you on and great insight and, uh, always a pleasure to talk candidly. Um, normally we're a little bit more boisterous, but given how terrible the situation is with COVID while working at home, I'm usually in person, but you've been great. Take a minute to give a plug for the data collective venture capital firm. DCVC you guys have a really unique investment thesis you're in applied AI, computational biology, um, computational care, um, enterprise enablement. Geospatial is about space and Capella, which was featured carbon health, smart agriculture transportation. These are kind of like not on these are off the beaten path of like traditional herd mentality of venture capital. You guys are going after big problems. Give us an update on the firm. I know that firm has gotten bigger lately. You guys have >>No, I mean the further firm has gotten bigger, I guess since Matt, Zach started about a decade ago. So we have about $2.3 billion under management. We also have bio fund, uh, kind of a sister fund. That's part of that. I mean, obviously we are, uh, traditionally an early stage investor, but we have gone much longer now with these additional, um, um, investment funds and, and the confidence of our LPs. Uh, we are looking for bears. You said John, really large intractable, um, industry problems and transitions. Uh, we tend to back very technical founders and work with them very early in the creation of their business. Um, and we have a huge network of some of the leading people in our industry who work with us. Uh, we, uh, it's a little bit of our secret weapon. We call it our equity partner network. Many of them have been on the cube. >>Um, and these are people that work with us in the create, uh, you know, the creation of this. Uh, we've never been more excited because there's never been more opportunity. And you'll start to see, you know, you're starting to hear more and more about them, uh, will probably be a couple of years of report. We're a household name. Um, but you know, we've, we we're, we're washing deal flow. And the good news is I think more people want to invest in and build the things that we've. So we're less than itchy where people want to do what we're doing. And I think some of the large exits that starting to come our way or we'll attract more, more great entrepreneurs in that space. >>I really saw the data models, data, data trend early, you saw a Realty impacted, and I'll say that's front and center on Amazon web services reinvent this year. You guys were early super important firm. I'm really glad you guys exist. And you guys will be soon a household name if not already. Thanks for coming on. Right, >>Alan. Thanks. Thank you. Appreciate >>It. Take care. I'm John ferry with the cube. You're watching a reinvent coverage. This is the cube live portion of the coverage. Three weeks wall to wall. Check out the cube.net. Also go to the queue page on the Amazon event page, there's a little click through the bottom and the metadata is Mainstage tons of video on demand and live programming there too. Thanks for watching.

(soft music) >> From around the globe, It's theCube with digital coverage of VeeamON 2020 brought to you by Veeam. Hi buddy. Welcome to the cubes coverage of VeeamON 2020, (laughs) the virtual version of VeeamON. and I'm here with Justin Warren who's the chief analyst and managing director of Pivot Nine. Justin, Good to see you. How are things down under? >> Not too bad. It was a bit of a rough start to the year. But things are looking a little bit better here in the middle of the year. It's tough times. >> And of course Justin, you may, you guys may know, as a many times you post and of course our other almost daily CUBE host these days, Stu Minivan joining us to unpack the Veeam keynotes, the trends in the marketplace. How you doing Stu? >> I'm doing great, Dave. Yeah. As you said, rather than us flying all around the country, we're in doing remote interviews every day, Its different, 2020.(laughs) >> So this has been quite a year, obviously. Because of course it was from Veeam's perspective, started out with that blockbuster exit $5 billion exit to private equity slash VC, insight capital, insight partners which was just an awesome thing for the founders. And some of the employees and actually going forward now, I think the balance of the employees really they'll have an opportunity to grow the valuation of the company even further. I think that's what we've seen with insight. I mean they want exits, so it's like they used to talk about, Ratmir Used to talk about Act Two (laughs) well now we're going to see it play out guys. So just some high level stats, a billion dollars last year in bookings. They're really shifting to an ARR model in a big way, 375,000 customers, 160 countries, 4,200 employees. Justin, do you remember when you first ran into Veeam at like some VMUG somewhere, who are these guys? Wow. They've certainly made it. >> They really have. And it's honest surprising but also not . They've feeling when I first encountered Veeam was that it's like well, who is this people? Yeah. What are they doing? It was very much SMB. It was very much practitioner, a very technical focus and people who used it just loved the product because back then the informal tagline was, it just were. And in those days it really was amazing. That there was a product that was simple and easy to use and worked on it, all of the things that they needed it to do. And I had a very, very VM focused back in that time. Hence the name of the entire company was go Veeam. And to see it grow from that one even then was quite a broad base but a very much an SMB market and see it grow across the entire industry. It's pretty remarkable. There is no really any ... Not many other companies who've pulled off this kind of growth momentum. >> Yeah. I mean Justin I think you nailed it there. I think back it's a company that hasn't stayed at a steady state still though. In the virtualization community, there were ripple effects. When Veeam went beyond just doing VMware and started to do Microsoft. Then a few years ago, I remember after we were doing the Q bed at the show, there was such a real push forward to extend the relationship with Microsoft, to the cloud. One of the things that we think we see loud and clear at this show is that VMware relationship early strong and as VMware goes to various cloud environment, Veeam can go along with that so that the relationship stays strong, but they're also in a lot of the public clouds and expanding beyond what they're doing. Yep. They're moving into the enterprising and I think one of the things we'll dig into is how enterprising is Veeam today. But absolutely it could company that very different than they were two or three years ago. And Dave, as you correctly pointed out now there's not the, who is this weird privately held company? Who's the ownership? I think there's a little bit of a more of a understanding as to, they're a big player in the space. And a little bit more a understanding as to where things go going forward. >> Well, I want to get your take on sort of their, we're going to go through a lot today, but the vision, that Danny Allan laid out in his keynote. And I think it's quite interesting. I mean, given the energy and the VC money coming into the market behind Cohesity and Rubrik the noise that they're making, what he put up as their vision is the most trusted provider of backup solutions, that deliver cloud data management. So as you guys well know, Cohesity and Rubrik really pushing this notion of data management, which means a lot of things to a lot of people. It's interesting to note that Veeam, first of all, new management, new CEO, Danny Allan, and now CTO, and obviously in a strategy role. So he's putting forth this kind of back to basics a mentality but then leapfrogging and trying to leapfrogging the data management narrative into the cloud, bringing cloud into it, super-gluing and cloud and data management which I think is really smart because when you think about multicloud data management for data protection It's got to be about cloud native and it's got to be somebody who's got no agenda around hardware or even necessarily a public cloud agenda. And Veeam wants to the be that Company. What do you think of that messaging Justin? >> I think broadly speaking, I think Veeam can pull it off. I do have some concerns around the whole data management thought. On the first thing of just being able to pull this off across the industry, I think vein is well-placed because it's always been about software. And it's always been about partnership. Though Veeam has been channel , It has been a hundred percent channel back in the day, very, very little direction. If any, at all, they are very strong on partnerships. They will partner with anybody because basically they don't really mind who else you deal with. They just want your backup to be done through Veeam. And the backup is very strong. That is what they are great at. So the risks they may own the data management side is it we've seen this play before pretty much ever backup company at some point just to talk about, Hey, we have a couple of your data. It's kind of sitting there and not really doing anything. What if we would attend this into something else and start using it for other purposes? But it's never really paid off for anybody. No, One's really done anything with their backup data in it in a true sense because we haven't seen anyone else become very good at that and be known throughout the industry of OES. Once you've backed up your data to the scene, you can then do all of these others stuff with it. I can't name anyone who's actually been quite successful at that but I can name plenty of people who've grown. >> Well Commvault is certainly tried actually guys, once you bring up the good competitive slide I want to that's a good lead in Justin. So what this data from our data partner, ETR Enterprise Technology Research, those whose watch our breaking analysis every week you see that we use this data extensively. And basically what we're showing here is the fundamental methodology that ETR uses is this thing called net score, which is kind of like net promoter score. It basically asks customers, are you buying? Are you increasing spending or decreasing spending takes the less subtracted from the more, and then you get a net score. That's the vertical axis. And it's an indicator of spending velocity, the horizontal axis it's labeled market share. It's not like IDC counts market share. It's a measure of mark pervasiveness within the survey. Then it's calculated by the mentions of the vendor divided by the total number of mentions within that sector. Now what we're showing here is a comparison of pure play data protection vendors and you can see there's no Dell EMC there's no IBM because they're not pure plays. I can't cut the data by data protection. So I got put fourth the pure plays. But let's walk through this so you could see here is you've got the pervasive company in the upper left. You can see the net scores and they could see the so the shared ends. This is 1,269 survey respondents. And you can see the shared end is the presence of these companies within that 1269, then CIOs and IT practitioners. So you can see Commvault very high presence but then interestingly and I guess not surprisingly Veeam right there. And then it drops off Veritas, Rubrik and Cohesity, and you can see where the heat map is on the vertical axis Rubrik, One of the highest net score is in the data set, and you've got Cohesity also very high, not as great of a presence in the data set. You can see Veeam very respectable. This was a 15 year old company with a relatively high net score. Really, really respectable, as I say in the solidly in the mid thirties and then Commvault getting into the pink zone and then Veritas in the red zone, low net score. And not as great as you're great at presence, which some concerns there for Veritas. So that's guys, that's the horses on the track. Anything there surprise you? Was it Veritas's position, it doesn't really surprise me, but it is remarkable just how our wife and the rest of the players that they are. And certainly that matches in the conversations the way having here with customers and others in industry. The nine Veritas just does not come out in the way that it used to. It used to be, I would have say that it would be, it used to be neck and neck with Commvault. Now we really don't hear the name Vera Tasman at all. Which is as a long time participant in the industry, Veritas was very much part of my career very early on. They were a stand by name. They were very well respected. But say seeing that sort of thing happened to it a great company, like Veritas it's a bit sad. Really? >> Well, you mean look at you're right. The Veritas was always the gold standard of a company with no hardware agenda. Who's going to be the Veritas of X? You would always use that sort of line or phrase. But now Stu, when I think about the opportunities here, It seems like multicloud is going to within the data protection space, is going to be run by somebody who can do cloud native. So in other words, running cloud native on, Azure, AWS and Google, maybe Alibaba, but cloud native, being able to take advantage of those native services on the cloud. Somebody who's got an on-prem presence who can bring that cloud experience on-prem. Who actually can do it also across clouds, a very, very high performance, low latency, very efficient, low cost. So in thinking about that multi-cloud landscapes, do how do you assess the horses on the track? >> Yeah, well, you know, Dave, first of all, one of the things Justin said, Veeam is partner-driven. One of the conversations I'm having for VeeamON is with the partner Alliance team, they are a hundred percent partner driven. And also for so many years, we talk about one of the negatives about Veeam is, Oh, well, most of their customer base is SMB, well, if you look at the cloud, one of the knocks against cloud for a long time was, Oh, it's just the really small companies that are doing a lot of clouds. Well, my data managers whether I'm a small company or a big company, so a lot of these pieces come together, Veeam has really been able to move into that cloud environment. What they're doing, sans across them . Data protection seems to be one of those areas when you talk about, the mantras, the industry like Amazon and say, okay when are they going to eat your business? Well, you know, Amazon's got a strong storage team. But data protection. They've got some very basic functionality in there but there's a robust ecosystem and companies like Veeam, I can capitalize on. >> Well, you mentioned the there in the enterprise, of course we all know the story of there a couple of years ago, there was a big enterprise, of course, they brought in some executives from VMware, some really high quality folks. They struck relationships with companies like HPE and Cisco. I think HPE in particular is it's paid off quite well but everybody wants to do business with Cisco cause they're very partner friendly and it's interesting. They kind of pull back from that not kind of. They pull back on that major initiative, the high price, direct sales people. And I remember doing a breaking analysis when Veeam got acquired or maybe it was even previous to that and making the comment to that yeah. They had to pull back on that, but I dug into the ETR data. Veeam actually has quite a presence in large companies. Maybe it's division of a large company, or maybe it's shadow IT, I don't know. People who just you don't want the simple backup but they're VMware customers. And it seems to me they really have an opportunity to go up market. Maybe kind of to reset that enterprise strategy. What do you guys think? >> Yeah, I think that's was what they were trying to do a couple of years ago. So I think hotly, they just didn't succeed quickly as they had hoped. There was also a little bit of an issue, which is something I remember speaking to the Retina Mayor about some years ago. About the challenge of being able to serve these different markets, because what SMB wants is quite different to what an enterprise want. And being able to fulfill both of those needs simultaneously from one company it's really challenging because things that you do for enterprise annoy SMB, the things that around ran complexity to be able to deal with the inherently complex environments that are enterprise. SMB just doesn't have that issue. Whereas if you can only do things in SMB type ways that annoys the enterprise, being able to satisfy both of those markets in a way that they both happy with. And so that no one else feels neglected that's pretty much what they wish that were struggling with nothing. So the hot pivot to enterprise they existing customer base, which then was rolling mostly SMB. They started to feel a little bit neglected. No, it was just a bit of a stumble. I think it feels like they've reset now and understood how to do these in a slightly more gentle fashion. But we can call it that. So rather than going for that really aggressive push into enterprise, they are just following the natural momentum, which is people who've come from SMB. And some of those medium companies grow into very large companies and bring them with them and others just that people as they move through their career will grow from a small company to maybe a medium company. And then they'll end up in a division of an enterprise scale and they used to Veeam and they want to bring what they they know in like they want to bring that experience to the company that they now work at. That is a sort of natural flow there I think for them that is only now showing the fruit of what was actually laid down a few years ago. >> Well, and I think there was something else going on there too, which is, we now know the company was positioning for an exit that was up for sale. So enterprise is very expensive, it's time consuming. The ROI is often times very long. That's why you see enterprise startups raising gobs of money and they just ,i think weren't getting the ROI. And when you think about insight, this is one of the more forward thinking, great PE or VC firms they'll live with rule of 40, right, where a rule of 35 or 80 rule of 50, where it's not just about growth, it's about growth plus EBIT. And if you add those up and it adds the 40 or 45 or 35 or whatever their target is, I don't know exactly what Insights looking forward but that's the combination that drives value. So my guess is they wanted to dial up EBIT and give it or the sale. And they might've had specific targets, who knows. That were being negotiated but i think that probably had something to do with it. And as well as you're pointing out, Justin, it takes time but us to If we look into some of the things that we're hearing from the messaging, some of the announcements and we'll get into that. Big, big discussion around digital transformation. One of the first, if not the first to do a backup for office 365, another a new version of Veeam backup for AWS. Oh. So there were some enterprisey types of things that they were there were talking about, a little glimpse at version 11.Any thoughts there, Stu. >> Yeah. Well, David, it's interesting, Justin put up a really good point there when you opt digital transformation Dave. Well, one of the things we've been saying for years, the difference between a company before and after that is you're leveraging the data. So, If I look at Veeam and say, do I protect the data absolutely? Do I secure your data? I'm involved with that. Actually one of the leadership changes, they just hired their first CSO. So bigger push for security, that'll help them a lot in what they do with it, public sector, that's where the CSO actually came from the public by that will help them. But what I didn't, haven't heard as much yet, is okay. I'm a piece of that data. And if you're going to the cloud, I can manage, I can protected and secure it. But how do I help connect people to get more value out of the data and leverage that data? So I think Justin nailed it with that. So many pieces that are important about data that Veeam does do. But that the discussion we always have in AI is be able to take that raw data and converting it into insights and out facts. >> Well, to Justin's point earlier about data management. And I want to to pick up on what you were saying about security, obviously everybody's talking about ransomware, but to me, you're talking about the CSO. The role of the CSO is obviously of course evolving it's Al board level topic. CSO, oftentimes was off as a peer, I say off, but as a peer to the CIO on purpose, they didn't want the CSO to report to the CIO cause it would have been like the Fox watching the hen house. But i think cause it was this sort of failure equals fire mentality and they wanted the truth. But I think now people have transparent discussions at the board about security. Hey, we know we're going to get penetrated. It's all about our response. Obviously we have to deal with the layers, but we're exposed, everybody's exposed. So I think increasingly organizations are realizing that it's a team sport, you've got to get everybody involved, the lines of business, the users being responsible. And of course IT, my point is that security and data protection are now becoming two sides of the same point. Almost like privacy. We've shared that before. So when you think about digital transformation, you think about data protection as part of your security portfolio? Not just something that you bolt on as an afterthought. And I think in many respects, Justin, that's maybe a bigger market opportunity for a lot of these data protection companies and backup companies, than the so-called opaque data management that you're referring to before. >> Yeah. I'd agree with that because what I'm saying from the security side of the market, particularly within large enterprise is a change in mindset from a prevention to a resilient, that kind of mindset around it and how to deal with it. Though previously there was a lot of either we'll just ignore it cause there's not really a problem and it's not going to happen to us. Then it became a kind of a fear response of just, we want to prevent it ever happening to us. Now it's kind of we've gone to an acceptance. And when going through the Kubler Ross. A framework for dealing with grief. People aren't understanding that sooner or later bad things are going to happen to us. What we need to figure out is how we deal with it when it does. And that's the mindset that you need to have when you're talking about data protection. So it's the same kind of mindset that you need for security. And now people are starting to look at, okay, how do we firstly detect if we've actually got a problem, if there's a breach or if there's a risk, how do we notice that we know that that's happening? And then once we noticed that, what do we do about it? So that's things like catching it early so that when you you'll recovery is small, which is the same general idea around software development of fail fast. You want to just pick the failures early so that you can correct them all. Basically if you find yourself in a hole stop digging and then once you've figured that out, okay now how do we recover from this in a way that is minimally disruptive to the business. And that could be like recovering from ransomware, having grilly solid backup. So you can restore weekly, that's the best protection against ransomware that you can have. Then you can start trying to figure out, okay, we know we can recover if it happens to us now let's just try to reduce the number of times that this does actually happen. That's the general idea that I'm seeing come through. More often with CSOs, with CIOs and with board level conversation. >> I want to come back to Justin and then Stu with your final thoughts. Justin, what do you take on this Veeam universal license? Was this a case of, hey we had so much complexity across our portfolio like that you're going to the Italian restaurant, you're just here you want everything in the menu or there's too much to figure out just the order for me. And they're trying to clean that up or do you see this as sort of a more innovative licensing approach? That's more cloud friendly. What do you make of that? >> I think it's a bit of both. think it's part of VeeamON thoughts as well again, from back in the very early parts of the company, the idea was that it just works. It should be simple and easy to use. So it's completely on brand for Veeam to have a simple and easy to use licensing model. There's a lot of criticism from enterprise and particularly from medium and small business, well overly complicated licensing models. We see people wrestling daily with the billing system within AWS. We see people frustrated with the licensing approach of Oracle. We see them seemingly frustrated when you not figuring out exactly what have I lost since then, what happened and what am I not licensed for in, Microsoft ecosystem. So for them to have a simple and easy to use licensing approach, it just fits right in with the rest of what the company is doing. It does also simplify the way that they organize and operate their company, as they have to deal with lots and lots of different partners, having a complicated licensing system on top of all of those other complicated licensing systems would just make their own job much, much harder. So this way it actually works for them as well as for their customers. >> Yeah. Simplicity is the watch word there Stu and I get, I mean, I get the sense in speaking to the customers, partners, that Veeam well has basically has the philosophy make it easy to and we'll sell more. We're not going to try to micromanage, to maximize revenue. You heard this certainly from some of their big partners who said that Veeam made it transparent. Our sales people for commissions and their salespeople and really make it easy to do business with. So Stu I'll give you the last word here. >> Yeah. So I think, as you mentioned, Veeam also listening and seeing what their partners are doing. So we've watched companies like AWS, trying to make a little bit simpler as to if I'm choosing compute, I don't have to be locked into one model a aisle, pay those across the environment or pure storage and other partner of Veeams. If I stay a customer, I make it easy to be able to move from one generation the next though, that cloud like model absolutely is what we expect. And when you talk to customers today, we know the only constant is change. I actually loved in the keynote. There was a I believe it was Satya Nadella that they quoted and said that, we've seen more change in the last two months that we normally would see in a decade. So Veeam being agile, moving, listening to their customers, learning with their partners and making sure that they've got things in the modern consumption model. >> Well, guys, thanks for helping us break down the VeeamON 2020, some of the trends in the market place.Some of the commentary and the keynote. Justin Warren Stu Minivan. Appreciate your time. >> Thank you very much. >> Thanks Dave. >> I thank you for watching everybody. This is Dave Vellante for Stu and Justin and the entire cube team, people right there. We'll be back with our coverage of VeeamON 2020, right after this short break. (soft music)

[Music] hi and welcome to this cube conversations in the cube in the cube Studios in Palo Alto California I'm your host Sonia - Gauri and today we're joined by Justin Warren the chief analyst and managing director for pivot 9 Justin welcome to the cube thanks for having me absolutely so tell us more about pivot 9 and more about your role yes so I found a pivot 9 back in 2011 and we help customers with their positioning in marketing and their messaging that's most of what we do these days we have a background in infrastructure enterprise consulting so we most of our clients tend to be focused on the enterprise and we also perform a bunch of analyst services basic research and understanding what the market is doing which helps us to to advise our clients on what makes a good position and message to take into the market that's great and you also founded this company so tell us about how you started this company and how you navigated funding well we're entirely so funded and have been profitable for for a while now it was kind of an accident in in the early days my background was in all traditional kind of consulting working with his clients on actually building infrastructure so I've done time in the trenches in in most of the different fields so I was once a DBA rapidly de-skilling and I got bored and decided that fairly company seemed like a good idea which was of course insane as anyone who is founded the company will gladly tell you but it has worked out okay for me in the end that's great and you're also you also do a couple other things you're a co-host on the cube or you're a host on the cube and you're also contributor of Forbes so tell us about how you got into hosting the cube and how that experience has been like for you host oh you can it was was kind of a happy accident I had known Stu for many years and an opportunity came up which I happened to be at a conference that he was he was at and said hey would you like to come on the cube and do a little bit of hosting and I will we said yes and have been doing a bit of it ever since every every now and again so yeah well it's when I happened to be at the same place and I do go to most of the major tech conferences it's it's always a pleasure to come on and guest host the Q but a little bit that's awesome and we love having you on the cube and you're also contributor on Forbes so tell us more about what articles you write what what topics in fields you mostly focus on yes oh uh mostly there I focus on enterprise and and cloud a little bit of networking and information security those are my interests and and it's my background so I know the enterprise technology field pretty well and now it's just interesting it gives me an opportunity to talk to a lot of different customers and find out or both customers and vendors and find out how they think about the market what what are they trying to build why are they trying to do that and whenever I'm talking to them I'm always trying to find a way that I can educate the audience about what what this means for them so it does dovetail nicely with the work we do through pivot nine but I just found it personally interesting and quite useful to be able to communicate what people are really doing and why it's why it's a good idea I think a lot of my readers value that that honesty and the insight that they get from that writing I certainly that's what they've told me so I like listening to customer feedback so if they tell me that I start to suck then I'll have to change what I do it but until when I'll keep doing it the way up and doing it that's awesome Justin thank you so much for being on the Kuban we really appreciate you have having you here no problem thank you so much absolutely thank you so much for watching the cube this has been a cube conversation at the cube studios and pellet [Music] you [Music]

[Music] hi and welcome to this cube conversation in the cube Studios in Palo Alto California I'm your host Sonia - Gauri and today we're joined by two guests Justin Warren who is the chief analyst and managing director of pivot 9 and John Troy the chief reckoner of tech reckoning John and Justin welcome to the cube Thanks thanks for having us great so Justin you're in Melbourne Australia John your local to California let's start with Justin Justin you work at pivot 9 tell us a little bit about your role and what you do so I'm the founder and chief analyst steered pivot know and so everything is my fault we we like to help customers with positioning and messaging that's what most of them come to us for so we we maintain a pretty good research focus on the market focus on enterprise infrastructure cloud and information security and our clients come to us for help with positioning into those markets that's awesome and John you're the chief reckoner at Tech reckoning so tell us more about tech reckoning and what you do sure in in a way my keep reckoner is just might know I guess I am also the bottle washer and analyst as well we work with companies that help them with their ecosystem of technologists we work community and influence and advocacy and Deverell is the term of art that people like right now but basically we work we help communities communicate with their their their the ecosystems of which that's great and you're both a host of the cube so let's go down the line John tell us how did you get into hosting the cube and how has that experience been like I was here at cube number one we we started to realize that video streaming was available in a reasonable way at events and I believe we worked we worked with John and Dave and some of the few boats who were Bill around now to bring them to VMworld over ten years ago I was also doing it home at myself with him disappear that we bought it electronic door I'm very quickly looking very welcome to have them take over a functionality for a lot of people and Justin how about you how's your experience been yeah it's been great it's a again happy accident as things started off I happen to nice to I've known him for a few years and they he was in need of submersed hosting spots at a conference that I I happen to be at anyway and I foolishly said yes and now I've done it more than once oh it's is it gets a lot easier after you've done it two or three time are there any tips and tricks you would give okay thank you so much for being on the cube and we will see you next time [Music] you [Music]

>>long from Las Vegas. It's the Q covering a ws re invent 2019. Brought to you by Amazon Web service is and in along with its ecosystem partners. >>Hey, welcome back to the Cube. Lisa Martin at AWS Reinvent 19. This is Day three of the Cubes coverage. We have two sets here. Lots of cute content are joined by Justin Warren, the founder and chief analyst at Pivot nine. Justin. How's it going? Great, right? You still have a voice? Three days? >>Just barely. I've been I've been trying to take care of it. >>Impressed. And you probably have talked to at least half of the 65,000 attendees. >>I'm trying to talk to as many as I can. >>Well, we're gonna talk to another guy here. Joining us from data ICU is well, Novak, the solutions architect will be the Cube. >>Thanks for having me. >>You have a good voice too. After a three day is that you >>have been doing the best I can. >>Yeah, he's good. So did ICU. Interesting name. Let's start off by sharing with our audience. Who did a coup is and what you guys do in technology. >>Yes. So the Entomology of date ICU. It's like hi cooze for data. So we say we take your data and, you know, we make poetry out of it. Make your data so beautiful. Wow, Now, But for those who are unaware Day like it was an enterprise data science platform. Eso we provide a collaborative environment for we say coders and clickers kind of business analyst and native data scientists to make use of organizations, data bill reports and Bill productive machine learning base models and deploy them. >>I'm only the guy's been around around for eight years. Eight years. Okay, >>so start up. Still >>mourning the cloud, the opportunity there That data is no longer a liability. It's an asset or should be. >>So we've been server based from the start, which is one of our differentiators. And so by that we see ourselves as a collaborative platform. Users access it through a Web browser, log into a shared space and share code, can share visual recipes, as we call them to prepare data. >>Okay, so what customers using the platform to do with machine learning is pretty hot at the moment. I think it might be nearing the peak of the life cycle pretty hot. Yeah, what a customer is actually actually doing on the platform, >>you know, So we really focus on enabling the enterprise. So, for example, G has been a customer for some time now, and Sergey is a great prototypical example on that. They have many disparate use cases, like simple things like doing customer segmentation for, you know, marketing campaigns but also stuff like Coyote predicted maintenance. So use cases kind of run the gamut, and so did ICU. Based on open source, we're enabling all of G's users to come into a centralized platform, access their data manipulated for whatever purposes. Maybe >>nobody talked about marketing campaigns for a second. I'm wondering. Are, is their integration with serum technologies? Or how would a customer like wanting to understand customer segmentation or had a segment it for marketing campaign? How would they work in conjunction with a serum and data ICU, for example? >>It's a great question. So again, us being a platform way sit on a single server, something like an Amazon ec2 instance, and then we make connections into an organization's data sources. So if using something like Salesforce weaken seamlessly, pull in data from Salesforce Yuka manipulated in date ICU, but the same time. Maybe also have some excel file someone you know me. I can bring that into my data to work environment. And I also have a red shift data table. All those things would come into the same environment. I can visualize. I can analyze, and I can prepare the data. I see. >>So you tell you it's based on open source? I'm a longtime fan of over. It's always been involved in it for longer than I care to remember. Actually, that's an interesting way t base your product on that. So maybe talk us through how you how you came to found the company based on basic an open source. What? What led to that choice? What? What was that decision based on? >>Yeah, for sure. So you talked about how you know the hype cycle? A. I saw how hot is a I and so I think again, our founders astutely recognize that this is a very fast moving place to be. And so I'm kind of betting on one particular technology can be risky. So instead, by being a platform, we say, like sequel has been the data transformation language do jour for many days now. So, of course, that you can easily write Sequel and a lot of our visual data Transformations are based on the sequel language, but also something like Python again. It's like the language de jour for machine law machine learning model building right now, so you can easily code in python. Maintain your python libraries in date, ICU And so by leveraging open source, we figured we're making our clients more future proof as long as they're staying in date ICU. But using data ICU to leverage the best in breed and open source, they'll always be kind of where they want to be in the technological landscape by supposed to locked into some tech that is now out of date. >>What's been the appetite for making data beautiful for a legacy enterprise, like a G E that's been around for a very long time versus a more modern either. Born in the Cloud er's our CEO says, reborn in the cloud. What are some of the differences but also similarities that you see in terms of we have to be able to use emerging tech. Otherwise someone's gonna come in behind us and replace us. >>Yeah, I mean, I think it's complicated in that there's still a lot of value to be had in someone says, like a bar chart you can rely on right, So it's maybe not sexy. But having good reporting and analytics is something that both you know, 200 year old enterprise organizations and data native organizations startups needs. At the same time, building predicted machine learning models and deploying those is rest a p i n points that developers can use in your organization to provide a data driven product for your consumers. Like that's amore advanced use case that everyone kind of wants to be a part of again data. Who's a nice tool, which says Maybe you don't have developers who are very fluent in turning out flashed applications. We could give you a place to build a predictive model and deploy that predictive model, saving you time to write all that code on the back end. >>One of the themes of the show has been transformation, so it sounds like data ICU would be It's something that you can dip your toes in and start to get used to using. Even if you're not particularly familiar with Time machine learning model a model building. >>Yeah, that's exactly right. So a big part of our product and encourage watchers to go try it out themselves and go to our website. Download a free version pretrial, but is enablement. So if you're the most sophisticated applied math PhD there is, like, Who's a great environment for you to Code and Bill predictive models. If you never built the machine learning model before you can use data ICU to run visual machine learning recipes, we call them, and also we give you documentation, which is, Hey, this is a random forest model. What is a random forest model? We'll tell you a little bit about it. And that's another thing that some of these enterprises have really appreciated about date I could. It is helping up skill there user base >>in terms of that transformation theme that Justin just mention which we're hearing a lot about, not visit this show. It's a big thing, but we hear it all the time, right? But in terms of customers transformation, journey, whatever you wanna call it, cloud is gonna be an essential enabler of being able to really love it value from a I. So I'm just wondering from a strategic positioning standpoint. Is did ICU positioned as a facilitator or as fuel for a cloud transformation that on enterprise would undergo >>again? Yes, great point. So for us, I can't take the credit. This credit goes to our founders, but we've thought from the start the clouds and exciting proposition Not everyone is. They're still in 2019. Most people, if not all of them, want to get there. Also, people want too many of our clients want the multi cloud on a day. Like who says, If you want to be on prim, if you want to be in a single cloud subscription. If you want to be multi cloud again as a platform, we're just gonna give you connection to your underlying infrastructure. You could use the infrastructure that you like and just use our front end to help your analyst get value. They can. I >>think I think a lot of vendors across the entire ecosystem around to say the customer choice is really important, and the customers, particularly enterprise customers, want to be able to have lots of different options, and not all of them will be ready to go completely. All in on cloud today. They made it may take them years, possibly decades, to get there. So having that choice is like it's something that it would work with you today and we'll work with you tomorrow, depending on what choices you make. >>It's exactly right. Another thing we've seen a lot of to that day, like who helps with and whether it's like you or other tools. Like, of course, you want best in breed, but you also want particularly for a large enterprise. You don't want people operating kind of in a wild West, particularly in like the ML data science space. So you know we integrate with Jupiter notebooks, but some of our clients come to us initially. Just have I won't say rogues that has a negative connotation. But maybe I will say Road road data Scientists are just tapping into some day the store. They're using Jupiter notebooks to build a predictive model, but then to actually production allies that to get sustainable value out of it like it's to one off and so having a centralized platform like date ICU, where you can say this is where we're going to use our central model depository, that something where businesses like they can sleep easier at night because they know where is my ML development happening? It's happening in one ecosystem. What tools that happening with, well, best in breed of open source. So again, you kind of get best of both worlds like they like you. >>It sounds like it's more about the operations of machine learning. It is really, really important rather than just. It's the pure technology. Yes, that's important as well, and you need to have the data Sinus to build it, but having something that allows you to operationalize it so that you can just bake it into what we do every day as a business. >>Yeah, I think in a conference like this all about tech, it's easy to forget what we firmly believe, which is a I and maybe tech. More broadly, it's still human problems at the core, right? Once you get the tech right, the code runs corrected. The code is written correctly. Therefore, like human interactions, project management model deployment in an organization. These are really hard, human centered problems, but so having tech that enables that human centric collaboration helps with that, we find >>Let's talk about some of the things that we can't ever go to an event and not talk about. Nut is respected data quality, reliability and security. Understood? I could facilitate those three cornerstones. >>Yeah, sure. So, again, viewers, I would encourage you to check out the date. ICU has some nice visual indications of data quality. So an analyst or data scientists and come in very easily understand, you know, is this quality to conform to the standards that my organization has set and what I mean by standards that could be configured. Right? So does this column have the appropriate schema? Does it have the appropriate carnality? These are things that an individual might decide to use on then for security. So Data has its own security mechanisms. However, we also to this point about incorporating best Retek. We'll work with whatever underlying security mechanisms organizations organizations have in place. So, for instance, if you're using a W s, you have, I am rolls to manage your security. Did ICU comport those that apply those to the date ICU environment or using something like on prime miss, uh, duke waken you something like Kerberos has the technology to again manage access to resources. So we're taking the best in breed that this organization already has invested time, energy and resources into and saying We're not trying to compete with them but rather were trying to enable organizations to use these technologies efficiently. >>Yeah, I like that consistency of customer choice. We spoke about that just before. I'm seeing that here with their choices around. Well, if you're on this particular platform will integrate with whatever the tools are there. People underestimate how important that is for enterprises, that it has to be ahead. Virginia's environment, playing well with others is actually quite important. >>Yeah, I don't know that point. Like the combination of heterogeneity but also uniformity. It's a hard balance to strike, and I think it's really important, giving someone a unified environment but still choice. At the same time. A good restaurant or something like you won't be able to pick your dish, but you want to know that the entire quality is high. And so having that consistent ecosystem, I think, really helps >>what are, in your opinion, some of the next industries that you see there really right to start Really leveraging machine learning to transfer You mentioned g e a very old legacy business. If we think of you know what happened with the ride hailing industry uber, for example, or fitness with Saletan or pinchers with visible Serge, what do you think is the next industry? That's like you guys taking advantage of machine learning will completely transform this and our lives. >>I mean, the easy answer that I'll give because it's easy to say it's gonna transform. But hard to operationalize is health care, right? So there is structured data, but the data quality is so desperate and had a row genius s, I think you know, if organizations in a lot of this again it's a human centered problem. If people could decide on data standards and also data privacy is, of course, a huge issue. We talked about data security internally, but also as a customer. What day to do I want you know, this hospital, this health care provider, to have access to that human issues we have to result but conditional on that being resolved that staring out a way to anonymous eyes data and respect data privacy but have consistent data structure. And we could say, Hey, let's really set these a I M L models loose and figure out things like personalized medicine which were starting to get to. But I feel like there's still a lot of room to go. That >>sounds like it's exciting time to be in machine learning. People should definitely check out products such as Dead Rock you and see what happens. >>Last question for you is so much news has come out in the last three days. It's mind boggling sum of the takeaways, that of some of the things that you've heard from Andy Jassy to border This'll Morning. >>Yeah, I think a big thing for me, which was something for me before this week. But it's always nice to hear an Amazon reassures the concept of white box. Aye, aye. We've been talking about that a date ICU for some time, but everyone wants performance A. I R ml solutions, but increasing. There's a really appetite publicly for interpret ability, and so you have to be responsible. You have to have interpret belay I and so it's nice to hear a leader like Amazon echo that day like you. That's something we've been talking about since our start. >>A little bit validating them for data ICU, for sure, for sure. Well, thank you for joining. Just to be on the kid, the suffering. And we appreciate it. Appreciate it. All right. For my co host, Justin Warren, I'm Lisa Martin and your work to the Cube from Vegas. It's AWS reinvent 19.

>>long from Las Vegas. It's the Q covering a ws re invent 2019. Brought to you by Amazon Web service is and in Came along with its ecosystem partners. >>Hey, welcome back to the Cube. Lisa Martin at AWS Reinvent in Vegas. Very busy. Sands Expo Center. Pleased to be joined by my co host this afternoon. Justin Warren, founder and chief analyst at Pivot nine. Justin, we're hosting together again. We are. >>It's great to be >>here. It's great to have you that. So. Justin Meyer, please welcome a couple of our cue ball. Um, back to the program. A couple guys from nut up. We have Anthony Lie, the S B, P and G m of the Cloud business unit. Welcome back at the >>very much great to be here >>and color coordinating with Anthony's Jandi Stephenson, Chief Technology officer and GPS Cloud. Welcome back. >>Thank you. Thank you >>very shortly. Dress, guys and very >>thank you. Thank you. It's, uh, the good news Is that their suits anymore. So we're not going to have to wear ties >>comfortable guys net up a w s this event even bigger than last year, which I can't even believe that 65,000 or so thugs. But, Anthony, let's start with you. Talk to us about what's new with the net up AWS partnership a little bit about the evolution of it. >>Yeah. I mean, you know, we started on AWS. Oh, my gosh. Must be almost five or six years ago now and we made a conscious effort to port are operating system to AWS, which was no small task on dhe. It's taken us a few years, but we're really starting to hit our stride Now. We've been very successful, were on boarding customers on an ever increasing rate. We've added more. Service is on. We just continue to love the cloud as a platform for development. We can go so fast, and we can do things in in an environment like aws that, frankly, you just couldn't do on premise, you know, they're they're complexity and EJ ineighty of on premise was always a challenge. The cloud for us is an amazing platform where we can go very, very fast >>and from a customer demand standpoint. Don't talk to me about that, Chief technologist. One of the thing interesting things that that Andy Jassy shared yesterday was that surprised me. 97% of I t spend is still on from So we know that regardless of the M word, multi cloud work customers are living in that multi cloud world. Whether it's by strategy, a lot of it's not. A lot of it's inherited right, but they have to have that choice, right? It's gonna depend on the data, the workload, etcetera. What can you tell us about when you're talking with customers? What what? How are they driving NetApp evolution of its partnership with public provider AWS? >>So actually, I don't know if it's the desired state to be running in a hybrid, mostly cloud fashion, but it's it's It's driven by strategy, and it's usually driven by specific workloads and on the finding the best home for your application or for your workers at any given time. Because it's it's ultimately unrealistic for on premise customers to try to compete with like a machine and keep learning algorithms and the rate of development and rate off basically evolution in the cloud. So you always have to be there to be able to stay competitive, so it's becoming a part of the strategy even though it was probably asked that developers that drove a lot off cloud adoption to begin with. Maybe, maybe not. Not in favor of the c i o r. You have, like a lot of Cloud Cloud sprawling, but there's no longer sprawling it. It's part of the strategy before every company in my way >>heard from any Jesse in the keynote yesterday about the transformation being an important thing. And he also highlighted a lot of enterprise. Nedda has a long history with enterprise, Yes, very solid reputation with enterprise. So it feels to me like this This is an enterprise show. Now that the enterprise has really arrived at with the cloud, what are you seeing from the customers that you've already had for a long time? No, no, no, I'm familiar with it. Trust Net up. We're now exploring the Clouded and doing more than just dipping their toe in the water. What are they actually doing with the cloud and and we'll get up together, you know, >>we see and no one ever growing list of workload. I think when people make decisions in the cloud, they're not making those traditional horizontal decisions anymore. They're making workload by workload by workload decisions and Internet EPPS history and I think, uh, performance on premises, given customers peace of mind now in the cloud, they sort of know that what's been highly reliable, highly scaleable for them on premise, they can now have that same confidence in the cloud. So way started. Like just like Amazon. We started off seeing secondary workloads like D r Back Up Dev ops, but now is seeing big primaries go A s, a p big database workloads, e commerce. Ah, lot of HBC high forming compute. We're doing very well in oil and gas in the pharmaceutical industries where file has been really lacking on the public cloud. I think we leaned in as a company years ago and put put, put a concerted effort to make it there. And I think now the workloads a confident that were there and we can give them the throughput. We give them the performance on the protocols and now we're seeing big, big workloads come over to the public clouds. >>And he did make a big deal about transformation being important. And a lot of that was around the operational model. Let's let's just the pure technology. But what about the operating model? How are you seeing Enterprises Transformer? There's a lot of traditionally just taken a workload, do a bit of lift and shift and put it to the cloud. Where are they now transforming the way they actually operate? Things because of >>cloud? Absolutely. I mean, they have to They have to adopt the new technologies and new ways of doing business. So I mean, I think they are actually celebrating that to answer point. I think this is not a partnership and we're partnering with. We have a very unique story. We're partnering with all of them and have really deep engineering relationship with all of them. And they are now able to go after enterprise type workloads that they haven't been gone. I've been able to go after before, so that's why it's such a strategic strategic relationship that we have with all of them. That sort of brings in in the freedom of choice. You can basically go everywhere anywhere. That, in my opinion, is that true hyper cloud story lot has always been really difficult. But with the data management capabilities of not top, it's really easy to move my greater replicate across on premise toe are hyper scaler off choice. >>I mean, I think you know, if you're in enterprise right now, you know you're a CEO. You're probably scared to death of, like, being uber, you know exactly on. Uh, you know, if you're you know, So speed has now become what we say. The new scale they used to be scaled is your advantage. And now, if you're not fast, you could be killed any day by some of these startups who just build a mobile app. And all of a sudden they've gotten between you and the customer and you've lost. And I think CEOs are now. How fast are we going? How many application developers do we have? And did a scientist do we have? And because of that, that they're seeing Amazon as a platform for speed on. So that's just that paranoia. I think digital transformation is driving everybody to the cloud. >>You're right. If we look at transformation if a business and Andy Jassy and John for your talked about this and that exclusive interview that they did the other day. And Andy, if you're and a legacy enterprise and you're looking at your existing market share segment exactly, and you're not thinking there's somebody else. What assisting on there on the side mirror? Objects in mirror are closer. Not getting ready for that. You're on the wrong. You're going to be on the wrong side of that equation. But if we look at cloud, it has had an impact on traditional story one of naps. Taglines is data driven. If we look at transformation and if we'll even look at the translation of cloud in and of itself, data is at the heart of everything. Yes, and they talk to us about net APS transformation as cloud is something that you're enabling on prime hybrid multi cloud as you talked about. But how is your advantage allowing customers to not only be data driven, but to find value in that data that gives them that differentiation that they need for the guy or a girl that's right behind them. I already did take over. >>Well, I think if you're you know, if you're an enterprise, you know, the one asset you have is data. You have history now >>a liability Now with an asset. >>Can they can they do anything with it. Do they know where it is? Do they know how to use it where it should be, you know, Is it secured? Is it protected all of those things? It's very hard for enterprise to answer those questions. What one end up, I think it's done incredibly well, is by leaning in as much as we did onto AWS way. Give our customers the absolute choice to leave our on premise business and a lot of people, I think years ago thought we were crazy. But because now we've expanded our footprint to allow customers to run anywhere without any fear of lock in, people will start to see us now not as a storage vendor but as a strategic partner, and that that that strategic partnership is really has really come about because of our willingness to let people move the data and manage the data wherever they needed to be. On that something our customers have said, you know, used to be a storage vendor on along with the other storage vendors and now all of a sudden that we're having conversations with you about strategy where the data should be, you know who's using it is. It's secured all of those kinds of conversations we're having with customers. >>You mentioned moving data, and that was something that again came up in the keynote yesterday. And he mentioned that Hey, maybe instead of taking the data to the computer, we should bring the computer's data. That's something that Ned Abbas has long actually talked about. I remember when you used to mention data fabric was something about We want to take your data and then make it available to where the computer is. I'd like you to talk it through that, particularly in light of like a I and ML, which is on the tip of everybody's tongue. It's It's a bit of I think, it's possibly reaching the peak of the hype cycle at the moment s o what our customers actually doing with their data to actually analyze it? Are they actually seeing real value from machine learning? And I are We still isn't just kicking the tires on that. >>I mean, the biggest problem with deep learning and machine learning is having our accumulating enough on being able to have the data or lessening that gravity by being able to move it then you can take advantage off states maker in AWS, the big Cleary and Google, whatever fits your needs. And then, if you want to store the results back on premise, that's what we enable. With it out of harbor having that free flowing work clothes migration has to count for data. It's not enough to just move your application that that that's the key for machine learning and thought the lakes and others, >>absolutely in terms of speed. Anthony mentioned that that's the new scale. How is flash changing the game >>with perspective, you know, flashes a media type, but it's just, you know, the prices have come down now that you know the price performance couple flashes an obvious thing. Um, and a lot of people are, I think now, making on premise decisions to get rid of spinning disc and replaced with Flash because the R. O. I is so good. Tco the meantime between failures, that's that's so many advantages that percent workloads. It's a better decision, of course. You know, AWS provides a whole bunch of media Onda again. It's just you like a kid in a candy store, you know, as a developer, you look at Amazon. You're like, Oh, my God. Back in the day, we had to make, like, an Oracle decision and everything was Oracle. And now you can just move things around and you can take advantage of all sorts of different utilities. And now you piece together an application very differently. And so you're able to sort of really think I think Dion sees point. People are telling us they have to have a date, a strategy, and then, based on the data strategy, they will then leverage the right storage with the right protocols. They'll then bring that to compute whatever compute is necessary. I think data science is, you know, a little fashion, you know, conscious. Right now, you know, everybody wants to say how many did a scientist they have on their teams? They're looking for needles in haystacks. Someone, they're finding them. Some of them are but not doing it, I think it is. Makes companies very, very nervous. So they're going the results, gonna trying as hard as they can to leverage that technology. >>And you'll see where is that data strategy conversation happening if we think about the four essentials that Andy Johnson talked about yesterday for transformation in one of the first things he said was, it has to be topped at senior level decision. Then it's going to be aggressively pushed down through the organization. Are you seeing this data strategy at the CEO level yet? >>Yeah, we are. But I'm also seeing it much lower. I mean, with the data engineers with the developers, because it's asked, is it is extremely important to be developing on top off production data, specifically if you're doing machine and deep learning. So I think it's both. I think the decision authority has actually moved lower in the company where the developers are the side reliability engineers are actually choosing more technology to use. That fits the product that they are actually creating off course. The strategy happens at the tall, but the influencer and the decision makers, in my opinion, has been moving lower and within the organization. So I'm basically contradicting what yes is a. But to me that is also important. The days off a C t o r C E o. Forcing a specific platform or strategy on to developers. Those days are hopefully gone. >>I think if you're a CEO and you know of any company in any industry you have to be a tech company, you know, it used to be a tech industry, and now every company in the world is now tech. Everyone's building APS. Everyone's using data. Everybody's, you know, trying to figure out machine learning. And so I think what's happening is CEOs are are increasingly becoming technically literate. They have to Exactly. They're dead if they're not. I mean, you know whether your insurance company, your primary platform, is now digital if you're a medical company or primary platform additional. So I think that's a great stat. I saw that about two and 1/2 years ago. The number of software engineering jobs in non tech surpassed the number of jobs in tech, so we used to have our little industry and all the software engineers came to work for tech companies. Now there are more jobs outside the tech segment for engineers, and there are in the text >>well, and you brought up uber a minute ago and I think of a couple of companies examples in my last question for you is real. Rapid is about industries. You look at uber for example, what the fact that the taxi cab companies were transitional. And we're really eager to, you know, AP, if I their organizations, and meet the consumer demand. And then you look at Airbnb and how that's revolutionized hospitality or pellet on how it's revolutionized. Fitness Last question, Jonesy, Let's go for you. Looking at all of the transformation that cloud has enabled and can enable what industry you mentioned when the gas. But is there any industry that you see right now that is just at the tipping point to be ableto blow the door wide open if they transform successfully? >>Well, I mean way are working with a lot off pharma companies and genome sequencing companies that have not actually working with sensitive data on if those companies, I mean, these are people's medical histories and everything, so we're seeing them moving now in close into the cloud so those companies can move to the cloud. Anybody can move to the cloud. You mean these sort of compliancy scaremongering? You cannot move to the cloud because of P. C. I or hip power. Those days are over because aws, Microsoft and Google, that's the first thing they do they have? Ah, stricter compliancy than most on premise Homemade tartar sentence. So I see. I see that industry really moving into the cloud. Now >>who knows what a ws re invent 2020 will look like Gentlemen I wish we had more time, but thank you. Both Young and Anthony were talking with Justin and me today sharing what's new with netapp. What? You guys are enabling customers. D'oh! In multiple. Same old way. We appreciate your time where my car is. Justin Warren, I'm Lisa Martin. You're watching the Cube from AWS or reinvent 19 from Vegas. Thanks for watching.

>>from our studios in the heart of Silicon Valley, Palo Alto, California It is a cute conversation. >>Hey, welcome back already, Jeffrey. Here with the cue, we're in our pal Amato Studios for acute conversation or excited, have ah, many Time Cube alone. I has been at all types of companies. He's moving around. We like to keep him close because he's got a great feel for what's going on. And now he's starting a new adventure. Eso really happy to welcome Alan Cohen back to the studio. Only great to see you. >>Hey, Draft, how are you >>in your new adventure? Let's get it right. It's the D C v c your partner. So this is ah, on the venture side. I'm gonna dark. You've gone to the dark side of the money side That is not a new firm, dark side. You know what's special about this town of money adventure right now, but you guys kind of have a special thesis. So tell us about yeah, and I think you've spoken >>to Matt and Zack. You know my partners in the past, So D. C. V. C is been in the venture business for about a decade and, um, you know, the 1st 5 years, the fund was very much focused on building, ah, lot of the infrastructure that we kind of take for granted. No things have gone into V m wear and into Citrix, and it's AWS, and hence the data collect of the D. C out of D. C. V. C. Really, the focus of the firm in the last five years and going forward is an area we call deep tech, which think about more about the intersection of science and engineering so less about. How do you improve the IittIe infrastructure? But how do you take all this computational power and put it to work in in specific industries, whether it's addressing supply chains, new forms of manufacturing, new forms of agriculture. So we're starting to see all that all the stuff that we've built our last 20 years and really apply it against kind of industrial transformation. So and we're excited. We just raise the $725 million fund. So we I got a little bit of ammunition to work with, >>Congratulate says, It's fun. Five. That's your eighth fund. Yeah, and really, it's consistent with where we're seeing all the time about applied a I and applied machine. Exactly. Right in New York, a company that's gonna build a I itt s'more the where you applying a i within an application, Where you applying machine, learning within what you do. And then you can just see the applications grow exactly right. Or are you targeting specific companies that are attacking a particular industrial focus and just using a eyes, their secret sauce or using deep taxes or secret uh, all of the above? Right. So, like I >>did when I think about D c v c like it's like so don't think about, um, I ops or throughput Orban with think about, um uh, rockets, robots, microbes, building blocks of effectively of human life and and of materials and then playing computational power and a I against those areas. So a little bit, you know, different focus. So, you know, it's the intersection of compute really smart computer science, but I'll give you a great example of something. It would be a little bit different. So we are investors and very active in a company called Pivot Bio, which is not exactly a household name. Pivot bio is a company that is replacing chemical fertilizer with microbes. And what I mean by that is they create microbes they used. So they've used all this big data and a I and computational power to construct microbes that when you plant corn, you insert the microbe into the planting cycle and it continuously produces nitrogen, which means you don't have to apply fertilizer. Right? Which fertilizer? Today in the U. S. A. $212 billion industry and two things happen. One you don't have. All of the runoff doesn't leech into the ground. The nitrous does. Nitrogen doesn't go into the air, and the crop yield has been a being been between about 12 and 15% higher. Right? >>Is it getting put? You know, the food industry is such a great place, and there's so many opportunities, both in food production. This is like beyond a chemical fertilizer instead of me. But it's great, but it's funny because you think of GMO, right? So all food is genetically modified. It's just It took a long time in the past because you had to get trees together, and yet you replant the pretty apples and throw the old apple trees away. Because if you look at an apple today versus an apple 50 years, 100 years, right, very, very different. And yet when we apply a man made kind of acceleration of that process than people, you know, kind of pushed back Well, this is this is not this is not nature, So I'm just curious in, in, in in, Well, this is like a microbe, you know? You know, they actually it is nature, right? So nature. But there'll be some crazy persons that wait, This is not, you know, you're introducing some foreign element into Well, you could take >>potash and pour it on corn. Or you could create a use, a microbe that creates nitrogen. So which one is the chemical on which one is nature, >>right, That that's why they get out. It's a funny part of that conversation, but but it's a different area. So >>you guys look, you guys spent a lot of time on the road. You talked a lot of startups. You talked a lot of companies. You actually talked to venture capitalists and most of the time where you know, we're working on the $4 trillion I t sector, not an insignificant sector, right? So that's globally. It's that's about the size of the economy. You know, manufacturing, agriculture and health care is more like 20 to $40 billion of the economy. So what we've also done is open the aperture to areas that have not gone through the technical disruption that we've seen an I t. Right now in these industries. And that's what's that mean? That's why I joined the firm. That's why I'm really excited, because on one hand you're right. There is a lot of cab you mentioned we were talking before. There is a lot of capital in venture, but there's not a CZ much targeted at the's area. So you have a larger part of global economy and then a much more of specific focus on it. >>Yeah, I think it's It's such a you know, it's kind of the future's here kind of the concept because no one knows, you know, the rate of which tech is advancing across all industries currently. And so that's where you wake up one day and you're like, Oh, my goodness, you know, look at the impacts on transportation. Look at the impacts on construction of the impacts on health care. Look at the impacts on on agriculture. So the opportunity is fantastic and still following the basic ideas of democratizing data. Not using a sample of old data but using, you know, real time analytics on hold data sets. You know, all these kind of concepts that come over really, really well to a more commercial application in a nightie application. Yeah. So, Jeff, I'm kind of like >>looking over your shoulder. And I'm looking at Tom Friedman's book The world is flat. And you know, if we think about all of us have been kind of working on the Internet for the last 20 years, we've done some amazing things like we've democratized information, right? Google's fairly powerful part of our lives. We've been able to allow people to buy things from all over the world and ship it. So we've done a lot of amazing things in the economy, but it hasn't been free. So if I need a 2032 c r. 20 to 32 battery for my key fob for my phone, and I buy it from Amazon and it comes in a big box. Well, there's a little bit of a carbon footprint issue that goes with that. So one of our key focus is in D. C V. C, which I think is very unique, is we think two things can happen is that weaken deal with some of the excess is over the economy that we built and as well as you know, unlock really large profit pulls. At the end of the day, you know, it has the word Venture Patrol says the word capital, right? And so we have limited partners. They expect returns. We're doing this obviously, to build large franchises. So this is not like this kind of political social thing is that we have large parts of the economy. They were not sustainable. And I'll give you some examples. Actually, you know, Jeff Bezos put out a pledge last week to try to figure out how to turn Amazon carbon neutral. >>Pretty amazing thing >>right with you from the was the richest person Now that half this richest person in the world, right? But somebody who has completely transformed the consumer economy as well as computing a comedy >>and soon transportation, right? So people like us are saying, Hey, >>how can we help Jeff meet his pledge? Right? And like, you know, there are things that we work on, like, you know, next generation of nuclear plants. Like, you know, we need renewables. We need solar, but there's no way to replace electricity. The men electricity, we're gonna need to run our economy and move off of coal and natural gas, Right? So, you know, being able to deal with the climate impacts, the social impacts are going to be actually some of the largest economic opportunities. But you can look at it and say, Hey, this is a terrible problem. It's ripping people across. I got caught in a traffic jam in San Francisco yesterday upon the top of the hill because there was climate protest, right? And you know, so I'm not kind of judging the politics of that. We could have a long conversation about that. The question is, how do you deal with these real issues, right and obviously and heady deal with them profitably and ethically, and I think that something is very unique about you know, D. C. V. C's focus and the ability to raise probably the largest deep tech fund ever to go after. It means that you know, a lot of people who back us also see the economic opportunity. And at the end of day there, you know, a lot of our our limited partners, our pension funds, you know, in universities, like, you know, there was a professor who has a pension fund who's gotta retire, right? So a little bit of that money goes into D C V C. So we have a responsibility to provide a return to them as well as go after these very interesting opportunities. >>So is there any very specific kind of investment thesis or industry focus Or, you know, kind of a subset within, you know, heavy lifting technology and science and math. That's a real loaded question in front of that little. So we like problems >>that can be solved through massive computational capability. And so and that reflects our heritage and where we all came from, right, you and I, and folks in the industry. So, you know, we're not working at the intersection of lab science at at a university, but we would take something like that and invest in it. So we like you know we have a lot of lessons in agriculture and health care were, surprisingly, one of the largest investors in space. We have investments and rocket labs, which is the preferred launch vehicle for any small satellite under two and 1/2 kilograms. We are large investors and planet labs, which is a constellation of 200 small satellites over investors and compel a space. So, uh, well, you know, we like space, and, you know, it's not space for the sake of space. It's like it's about geospatial intelligence, right? So Planet Labs is effectively the search engine for the planet Earth, right? They've been effectively Google for the planet, right? Right. And all that information could be fed to deal with housing with transportation with climate change. Um, it could be used with economic activity with shipping. So, you know, we like those kinds of areas where that technology can really impact and in the street so and so we're not limited. But, you know, we also have a bio fund, so we have, you know, we're like, you know, we like agriculture and said It's a synthetic biology types of investments and, you know, we've still invest in things like cyber we invest in physical security were investors and evolve, which is the lead system for dealing with active shooters and venues. Israel's Fordham, which is a drone security company. So, um, but they're all built on a Iot and massive >>mess. Educational power. I'm just curious. Have you private investment it if I'm tree of a point of view because you got a point of view. Most everything on the way. Just hear all this little buzz about Quantum. Um, you know, a censure opened up their new innovation hub in the Salesforce tower of San Francisco, and they've got this little dedicated kind of quantum computer quanta computer space. And regardless of how close it is, you know there's some really interesting computational opportunities last challenges that we think will come with some period of time so we don't want them in encryption and leather. We have lost their quantum >>investments were in literally investors and Righetti computing. Okay, on control, cue down in Australia, so no, we like quantum. Now, Quantum is a emerging area like it's we're not quite at the X 86 level of quantum. We have a little bit of work to get there, but it offers some amazing, you know, capabilities. >>One thing >>that also I think differentiates us. And I was listening to What you're saying is we're not afraid. The gold long, I mean a lot of our investments. They're gonna be between seven and 15 years, and I think that's also it's very different if you follow the basic economics adventure. Most funds are expected to be about 10 years old, right? And in the 1st 3 or four years, you do the bulk of the preliminary investing, and then you have reserves traditional, you know, you know, the big winners emerged that you can continue to support the companies, some of ours, they're going to go longer because of what we do. And I think that's something very special. I'm not. Look, we'd like to return in life of the fun. Of course, I mean, that's our do share a responsibility. But I think things like Quantum some of these things in the environment. They're going to take a while, and our limited partners want to be in that long ride. Now we have a thesis that they will actually be bigger economic opportunities. They'll take longer. So by having a dedicated team dedicated focus in those areas, um, that gives us, I think, a unique advantage, one of one of things when we were launching the fund that we realized is way have more people that have published scientific papers and started companies than NBA's, um, in the firm. So we are a little bit, you know, we're a little G here. That >>that's good. I said a party one time when I was talking to this guy. You were not the best people at parties we don't, but it is funny. The guy was He was a VC in medical medical tech, and I didn't ask him like So. Are you like a doctor? Did you work in a hospital where you worked at A at a university that doesn't even know I was investment banker on Wall Street and Michael, that's that's how to make money move. But do you have? Do you have the real world experience of being in the trenches? Were Some of these applications are being used, but I'm also curious. Where do you guys like to come in? ABC? What's your well, sweets? Traditionally >>we are have been a seed in Siri's. A investor would like to be early. >>Okay, Leader, follow on. Uh, everybody likes the lead, right? Right, right, right. You know what? Your term feet, you >>know? Yeah, right. And you have to learn howto something lead. Sometimes you follow. So we you know, we do both. Okay, Uh, there are increasing as because of the size of the fund. We will have the opportunity to be a little bit more multi stage than we traditionally are known for doings. Like, for example, we were seed investors in little companies, like conflict an elastic that worked out. Okay, But we were not. Later stage right. Investors and company likes companies like that with the new fund will more likely to also be in the later stages as well for some of the big banks. But we love seed we love. Precede. We'd like three guys in in a dog, right? If they have a brilliant >>tough the 7 50 to work when you're investing in the three guys in a dog and listen well and that runs and runs and you know you >>we do things we call experiments. Just you know, uh, we >>also have >>a very unique asset. We don't talk about publicly. We have a lot of really brilliant people around the firm that we call equity partners. So there's about 60 leaning scientists and executives around the world who were also attached to the firm. They actually are, have a financial stake in the firm who work with us. That gives us the ability to be early Now. Clearly, if you put in a $250,000 seed investment you don't put is the same amount of time necessarily as if you just wrote a $12 million check. What? That's the traditional wisdom I found. We actually work. Address this hard on. >>Do you have any? Do you have any formal relationships within the academic institutions? How's that >>work? Well, well, I mean, we work like everybody else with Stanford in M I t. I mean, we have many universities who are limited partners in the fund. You know, I'll give you an example of So we helped put together a company in Canada called Element A I, which actually just raised $150 million they, the founder of that company is Ah, cofounder is a fellow named Joshua Benji. Oh, he was Jeff Hinton's phD student. Him in the Vatican. These guys invented neural networks ing an a I and this company was built at a Yasha his position at the University of Montreal. There, 125 PhDs and a I that work at this firm. And so we're obviously deeply involved. Now, the Montreal A icing, my child is one of the best day I scenes in the world and cool food didn't and oh, yeah, And well, because of you, Joshua, because everybody came out of his leg, right? So I think, Yes, I think so. You know, we've worked with Carnegie Mellon, so we do work with a lot of universities. I would, I would say his university's worked with multiple venture firm Ah, >>such an important pipeline for really smart, heavy duty, totally math and tech tech guys. All right, May, that's for sure. Yeah, you always one that you never want to be the smartest guy in the room, right, or you're in the wrong room is what they say you said is probably >>an equivalent adventure. They always say you should buy the smallest house in the best neighborhood. Exactly. I was able to squeeze its PCB sees. I'm like, the least smart technical guy in the smartest technical. There >>you go. That's the way to go. All right, Alan. Well, thanks for stopping by and we look forward. Thio, you bring in some of these exciting new investment companies inside the key, right? Thanks for the time. Alright. He's Alan. I'm Jeff. You're watching the Cube. We're Interpol about the studios. Thanks for watching. We'll see you next time.

>> Announcer: Live from San Fransciso, celebrating 10 years of hi-tech coverage, it's the theCUBE, covering VMworld 2019. Brought to you by VMware and its eco-system partners. >> Welcome back everyone. It's theCUBE's live coverage at VMworld 2019. I'm John Furrier, Dave Vellante, Dave, 10 years doing theCUBE at VMworld, what a transformation, lot of technologies coming back into the center of all the action. SD-WAN's one of them, we got two great guests, two entrepreneurs, the co-founders of VeloCloud. Sanjay Uppal who's the VP and GM of VeloCloud Business Unit part of VMware, VMware bought on December 2017, Steve Woo, Senior Director of VeloCloud Business Unit. Also co-founder, you guys both strong in networking, entrepreneurs, congratulations on. >> Thank you. >> That was two years ago. Okay, so, we were reminiscing about 10 years, 2010, when we first started doing theCUBE to now, but more than ever SD-WAN, just over the past 24 months, 36 months, a lot's changing as cloud has become more obvious. Certainly public cloud, no debate, but we start talking about cloud 2.0. Enterprise requirements are much unique and different that just, you know, being born in the cloud at least like the startups are. So, whole different challenges. This is a kind of difficult, it's a networking challenge. Networking and security are the two biggest, hottest areas right now in tech as clouds scale, the enterprise comes in. What's the vision, Sanjay? >> So what's going on here as you were rightly pointing out, cloud is changing. It's no longer people just want to get from private to public, it's a multi-cloud world and it's a hybrid cloud world. Now, that's talking at it from the compute standpoint. But, other services are also moving to the cloud, security services are moving to the cloud, so when you look at it from that standpoint, our customers want to get from the clients, which could be a user, it could be a thing, it could be a machine, all the way to the container which has the application. So we're looking at SD-WAN as being that fabric that connects from the client to the cloud to the container. And as you're rightly pointing out, networking and security is the hot area right now. So how does security and networking impact this client to cloud to container world is where SD-WAN is headed toady. >> And Pat Gelsinger who just came fresh off the keynote, he'll be on tomorrow, I'm going to ask him this question directly but, we've always been saying public cloud is such a great resource, I mean, who doesn't want all that massive compute, massive storage, if you can use it? But when you start getting into hybrid, right? I said the data center's an edge. And he's talking about a thin edge and a big edge and a thick edge, so when you're a networking packet, when you're in networking you move stuff around, you're an edge and you're a center, you're a core. These are networking concepts, this is not new, I mean, this is not new. >> Yes, this is not new. And I think the concept of the edge, as he was pointing out, there's different edges everywhere and you have to really look at it from, as you're crossing the boundary, how do you get the packets from point A to point B? Making sure that the performances are short, so you get the application layer performance, but yet not increasing your attack surface from a security standpoint. And so, the facilities that Steve and myself and other folks at VeloCloud have constructed is really reducing the attack surface by segmentation. But making sure that the conversation from the client to the cloud to the container has that assured performance, particularly for real time applications. Which are actually not easy to get right because the underlying transport may not actually help in any great way. >> So, John, you said it's not really new for you networking guys, it's really not. At the same time, Pat talked about choice versus complexity so it's a much more complex world. So you've had to change the way in which, you approach from a technology standpoint I presume? The roadmap has probably shifted, maybe you could talk about that a little bit. >> So, absolutely. So the discussion about moving to the cloud has been about the compute, but then you have to also actually look at the network, right? They forecast that 30 to 50% of the enterprise traffic is going to go to the cloud, right? But the network in the past was built for applications going to the on premise data center. So what we've had is inequality where you've had a full enterprise grade network going to the enterprise data center, but actually your cloud access was a second grade citizen. As Sanjay was saying, I still want performance, I still want security, and then in fact, as people actually expand to the cloud but actually put more and more workloads in the cloud, they start to realize, gee, where's my automation? Where's my scaling? So that still has to be done at the branch that the remote sites that need access to the cloud, and they need this automated, secure, high performing access to all the cloud workloads. Especially even that it's now moved to multi-cloud, right? So you went from on premise, a little bit in the hybrid, private cloud, now many more instances and now multi-cloud, becomes more and more complex and that's where cloud delivered SD-WAN really addresses that problem. >> So Steve, lay out the architecture, so let's just all roleplay for a second here. I'm a CCO, CIO, I'm progressive, got my hands in all the top things, certainly security's number one concern I have. And I'm building my own stack, I love the cloud, I don't want to make it a second class citizen, I really want to re-architect this. What the playbook, what do I do, what's your recommendation? >> Alright, so the playbook is, and this is advice from the cloud compute centers as well, right? Go direct to the cloud, don't back haul it through the enterprise data center and introduce latency so you now need Internet Breakout at more locations, not just the central data center. But I still need the security, so how do I have cloud security for traffic going straight to the cloud versus going back to the east west, to the data center? So really, the advantage that the SD-WAN solution has is it's actually a hybrid that has a footprint on premise but also has a cloud footprint. So Sanjay and I and VeloCloud, we have this big network of cloud gateways so you have the footprint on prem and in the cloud to have distributed security. >> So, Sanjay, talk about, back to your original bumper sticker, client, cloud, containers. So, I see that security piece. How important has the container piece become? And what is that role of the container in the future? Is it going to be a wrapper for legacy apps, is it going to be primary for new apps? Because Kubernetes clearly is orchestrating a bunch of containers and other services so the role of the container's certainly super valuable. How does that impact some of the efficiencies that's needed for networking and to ensure security? >> Yeah, great question. You know, the networking folks, and networking was always relegated to being the underlay or the plumbing. Now what's becoming important is that the applications are making their intent aware to the network. And the intent is becoming aware. As the intent becomes aware, we networking people know what to do in the SD-WAN layer, which then shields all the intricacies of what needs to get done in the underlay. So to put it in very simple terms, the container's what really drives the need and what we're doing is we're building the outcome to satisfy that need. Now containers are critical because as Pat was saying, all of the new digital applications are going to be built with containers in mind. So the reason we call it client to cloud to container is because the containers can literally be anywhere. You know, we're talking about them being in the private cloud and then the public cloud, they could be right next to where the client is because of the edge cloud. They could be in the telco network which is the telco cloud. So between these four clouds, you literally have a network of these containers and the underlying infrastructure that we are doing is to provide that SD-WAN layer that'll get the containers to talk to one another as well as to talk to the clients that are getting access to those applications. >> You know, sometimes it takes a history lesson to figure out the future. I was talking with Steve Herrod and I want to get your reaction to a comment he made to me when we were talking about the impact of VMware back in the old days, you know, virtualization. Virtualization kind of came out as an application and then it became what it did in the server world, just changed the game. But one key thing that we talked about and he mentioned was, the key was that virtualization allowed for massive efficiencies. Not just on price and consolidation of service and efficiency on price, but it enabled more efficiencies in performance without any code changes to the application. So the question is, is that, okay, containers I buy 100%, we agree, since Docker and early days to now with the Kubernetes, containers are going to be a game changer. What's that dynamic that's going to come next? Is there a view from your perspective on that step up function of value without a lot of application rewrites or network changes? I mean, I'm just trying to figure out how that fits together what's your view on that? >> Yeah, let me drag this first and then maybe Steve can comment as well, so. The first thing is that SD-WAN, just like server virtualization did, we're doing what server virtualization was for the network. So you don't require any changes to your underlay, meaning that you don't require changes to your broadband, you don't require changes to your LTE and even 5G, as well as the NPLS network so you don't have to twiddle with those bits, we manage it all in the overlay, this is exactly similar to what VMs did when it came to server virtualization. Now, when containers come in, because we get the visibility of what the container wants, we can both in real time, as well as a priori, figure out how the network should be configured. And that is a game changer because a container could be right next to you, it could be in the cloud, far edge, thin edge, it's not just a destination, it's literally everywhere. And that underlying fabric, if the underlying fabric of the network doesn't work, your digital transformation project for containers is not going to work either. You there's a key building block over there. >> So if I get this right, you're saying is that because you have that underlay visibility without any changes, by making efficiencies there, you then can understand what the container wants so you're bringing intelligence to the container and vice versa? >> Yes, so that containers tells us what do they need to run, I mean the application tells us, which is built with containers. And what we do is we dynamically measure how the network is performing, and we adapt to what the container wants. We call this outcome driven. We know what the outcome is and we adapt the networking to deliver that outcome. >> So I want to ask you guys, so Pat talked today about 8% better improvement relative to bare metal, but it's really about the entire system, the entire network. And I'm curious as to how you guys are evolving. You know, John and I talk about cloud 2.0, how you're evolving to support that. Because it's really about application performance in total, what the user sees, not what I can measure in some on prem data center, I'm not saying Pat was doing that, but my guess to deduce the numbers for the keynote they probably did do that. So, how is your infrastructure and architecture evolving to support application performance across the network? >> Right, right. So, to add to what Sanjay was saying in terms of just being aware of the requirements of the containers and optimizing and having visibility but actually, leverage the container and virtual machine technology in the SD-WAN platform itself. So in terms of solving the network problem, it's not just about us virtualizing the network resources and then choosing the best path across the network to the applications, but actually hosting some applications that deserve to be moved out to the edge to help solve the performance problem as well. A good example is IOT, where you just have a lot of data, a lot of real time data that needs real time control response instead of necessarily going over the most efficient path to an existing cloud data center on premise, perhaps do some of the analytics actually in the SD-WAN network edge, and we can do that with containers. >> So what about the real time aspect? Because I think that's a key point, you mentioned that, Sanjay, earlier. Because, I remember, not the date myself, but I remember back in the days when policy was a revolution, oh my God, we can do policy based stuff! And provisional stuff, that was an, oh my God, static network, though, I mean everything was provisioned, buttoned up nicely, you're not dealing with a static network when you're dealing with services. So you're moving up the stack, we're talking containers now, at the application level, assuming you have the fabric down here. There's going to be a lot of stuff being turned on, turned off, things provisioning, unprovisioning, so a lot of dynamic nature going on. So, if I see this right, policy is key and enables some intelligence, it's got to have an impact on the real time so talk about what real time means, some of the challenges, is it just a transactional issue? Is it latency? And is that where the container magic happens? Just unpack that a little bit. >> So there's really four classes of real time applications that we see. Voice, video, VDI and IOT. Now, there's of course, other applications that are built from these building blocks or these types of application, sub-applications. Now, each of these has a latency requirement, but it also has a requirement in terms of dynamism, so as you know, video can change dramatically from one moment to the other, variable portrayed video, right? Voice doesn't change as dramatically but has very stringent requirements in terms of when that packet should show up. So when we look at these, and you put them on a best effort network that only says that they're going to get the packet from point A to point B, these real time applications may not work. So what we have constructed is an overlay that supports realtime applications even on best effort networks. And this is actually a fairly significant shift in the industry, like if you look at running, you know, all of us have done a voice call, on a broadband and you hear these artifacts and rubberbanding and you can't hear the other person, right? But with VeloCloud, we're able to provide guarantees running on best effort networks. And I think that is a game changer. That is going to be a game changer also as the applications get much more dynamic. I mean, you bring in containers, one of the issues is where should that application run? That can be decided in real time. VMware invented this whole vMotion idea, well how about vMotioning the container? And how are you going to vMotion it and how are you going to decide where that container should be? So all of this is really what a networking infrastructure can provide for you in real time. >> And you've got this overlay, and without performance degradation or dramatic performance degradation, right? So what's the secret sauce behind that? >> So, the secret sauce in our solution is something we call dynamic multi-path optimization. So just like virtualization was done for the data center, first continuously monitor the resource's performance, capacity of the different underlay resources and then in real time, recognizing the business priority of the different applications, instantly put the workload, or in this case, the network WAN traffic on the right resource and actually have the flexibility to move it as conditions change, as capacity changes. And further than that, if you can't stare around the problems that we may see in the network, we can actually remediate the actual traffic streams and since we're on both ends we can have a lot of optimization tricks and actually make sure that real time data applications work perfectly. >> So it's a data analysis and a math problem to solve? >> Yeah, so we use that for real time optimization, and then the other benefit is we have this huge, in the cloud, of course, huge data lake of information that we continue to share more and more with the users so they can see the overlay, so that the entire underlay environment of the WAN, where it's going in the different hybrid cloud, and also the overlay performance. There's going to be huge value in that in terms of solving network problems. >> Are the telcos a bottleneck to the future or is 5G going to solve all that, or? >> Telcos are a partner, and more than 50% of our business is done with the telco. So it's us working with the telco and then going eventually to the enterprise. >> And they're moving at the speed that you want em to move? They're saddled with pressures on costs and network function virtualization, and it's a complicated problem. >> Right, as you heard Pat say in the morning, the telcos are going through a dramatic change. Because they're shifting away from this custom proprietary hardware infrastructure into a completely software driven world, right? And so the telco is a critical partner. They are virtualizing their own network, they are virtualizing the core of the network using VMware and other technologies, and as they're doing that, they're virtualizing what goes out to the enterprise customer. And the network virtualization piece, of course, is built on SD-WAN. One thing I wanted to add to what Steve said, is that we collect almost 10 billion flow records a day. From across all of our 150,000 sites, and this is a treasure trove of information. It is this information that allows us to develop the next generation algorithms. We're the only ones who have that much information that is collected, it's rich information, it's about how the network performs, how the applications are, where it is going, how the application workloads are. And using this we generate the next generation algorithms that'll optimize the networks and make them more secure. >> And that is the benefit of SaaS, the beautiful thing about having a SaaS platform, easy to stand up, the data becomes a really critical aspect for making the network smarter, to your point, this is all those data points. It's an operating, sounds like an operating system to me. >> It's a highly distributed network operating system. >> Guys, thanks for coming on, great insight. Final question to end the segment, as two co-founders and entrepreneurs, when you started VeloCloud, knowing what's going on today, explain in your entrepreneurial mind, where this is going, because this isn't your, as they say, grandfather's SD-WAN market anymore. It's really turning into, quite frankly, next generation networking, next generation software, you mentioned it's network operating system, it's one big distributed network. And all these new things are happening, what's the vision? Is this what you thought it would be when you guys started? >> Well, you know, the amazing this is many startups usually go through a pivot, right? They start off as one thing and maybe more than one pivot, in fact, I think it was a couple of years ago that we just for grins, looked at the first few slides that Steve has made when we had got started. For our seed investor, where we actually had absolutely nothing! And it was, actually is very true, the graphics were very very poor, other than that the idea of moving to the cloud and using the cloud as the network, even at that time we said the cloud is the network. That has not changed. And so, the enduring vision here is that regardless of where you are, you're on laptops right now, clients could be sensors, actuators, all of this is going to go through a network cloud. And that network cloud is going to be responsible for getting you to any final destination. Whether it's your nearby container or whether it's running in some public cloud. And so the vision is trust the network, it's going to make sure that it'll figure out whether you should be on Wi-Fi or Bluetooth or LTE or 5G or whatever have you. You just say this application's important to me. The network is going to take care of the rest of it. >> Well you guys are certainly music to our ears, we love network effects, we think network effects is not just the way media is today but also technology, the network is all interconnected it's all instrumented, you can get the data. There's no blindspots, if you can instrument it, you can automate it. You guys are pioneers, thanks for coming on theCUBE, appreciate it. >> Good to have ya. >> Thank you. >> CUBE coverage here, 10 years covering VWworld, I'm John Furrier, Dave Vellante. Back with more live coverage after this short break. (electronic music)

>> (upbeat music) From San Francisco it's the CUBE covering VMware radio 2019, brought to you by VM ware. >> Welcome to the cube Lisa Martin with John Furrier in our exclusive coverage of VM ware Radio 2019 in San Francisco. John and I are pleased to welcome back to the cube Rajiv Ramaswami, COO of products and cloud services Rajiv, Welcome back >> Rajiv Ramaswami: Oh thank you glad to be here as always >> Lisa Martin: 15th annual radio a lot of research a lot of innovation. Give our viewers an idea of some of the historical products and services that have come out of the radio and the innovation programs at VMware has been doing for a long time >> Rajiv Ramaswami: Yeah I mean, I'm excited about Radio right I mean many of our key innovations came out of Radio. Very early back in the days the fundamental concepts of vSphere replication and disaster recovery came out of Radio papers, a long time ago. Some of the innovations within vSAN were showcased at the radio many many years ago. So across the board, I would say many of the products you know are key portions of the products were deployed I mean in the form of Radio papers over the years and if you look at this year for example you know we can see how things have changed with the times as VMware is evolved, so does Radio along the way. So this year, I was struck by the number of papers on machine learning and AI right, it's forward-looking of course everything we do here and it's just now ML is now across many of our products and that's being you know seen in Radio and of course, what we see at Radio is always more forward-looking than what's actually in the products. So that's an area I see a lot of work and another area I see a lot of work on is Kubernetes and the cloud native and then of course the traditional areas of how to optimize storage, networking and even when it comes to networking and so forth, papers on cloud networking and how you know we can optimize for networking in the cloud So in general, I mean the trend here is a reflection of what we are probably likely to do in the next several years >> John Furrier: One of your jobs as Chief Operating Officer I see, to operate them on the product side of the business generate that kind of enablement for the sales team and ultimately customers right. >> Rajiv Ramaswami: Yes >> John Furrier: So you've got to kind of mind the farm here >> Rajiv Ramaswami: yeah >> John Furrier: kind of cultivate and see what's organically growing out of VMware from the top engineering and stuff top papers. what's the process? how do you go attack the all the action because there's a lot of forward-looking stuff there's a lot of pie in the sky is a lot of cool different stuff that looks weird >> Rajiv Ramaswami: yes >> John Furrier: but sometimes that weird stuff looks is actually going to be the future so you got to have a broad perspective, how do you act this? >> Rajiv Ramaswami: Yeah, in fact I would say one of our biggest jobs is portfolio management. We have to look at balance our investments across this range that you talked about right so at any point in time we will have a set of technologies and products that we incubating these are relatively new sometimes new areas for us sometimes extensions to existing areas that we are incubating and these are of course businesses that don't drive much revenue right now but over times yes hopefully well right and then there are businesses, I'll give you examples of each of these now there are businesses that are in growth mode where we've already established a good product market fit we know that we can scale this business and its a different set of investments and in that growth category and then there are relatively mature businesses that we know we need to run efficiently in fact they need to generate cash that we can go back and invest into these other right and then there are things that we want to get out of and diverse so we look at our R&D portfolio along those and at any point in time there's stuff in everyone of these buckets to give you some examples of what's in each of these today obviously we have a big focus in cloud native most of that is incubation at that point right not substantial revenue, yet a big you know we've acquired Heptio for example last year to bolster our own internal efforts so a lot of work a lot of effort being put into that with the idea of building a future business in a significant way some of our more recent growth business were are now very much in the scale category you look at VSAN, you look in a EXSi, you look at VeloCloud as part of the overall networking portfolio these are all in the scale category right they have substantial revenues are growing very nicely we're investing some of our other bigger businesses like vSphere which is our classic you know foundation for everything we do Yes, I would say in the mature, you know category and then over by an large we've reduced investments and some small businesses, I mean if we were to look at historically vCloud Air that the business we got out of right so these we do along the way otherwise >> John Furrier: a good call, or you quit call >> Rajiv Ramaswami: yeah so in fact one of Raghu's and my biggest jobs really is to figure out how much we put in each of the these buckets, make sure you're placing enough in the future of best category while also making sure your delivering on the numbers for the day >> John Furrier: I love that's exactly what I was going at this about the future bets >> Rajiv Ramaswami: yeah >> John Furrier: what is on the business side one of the I asked Pat Gels, I'll ask you the same thing but different context, you know this is an engineering celebration as well as kind of competition internally I guess kind of proud to be people are proud to be here kind of an elite status but engineers want to work for a company and solving hard problems >> Rajiv Ramaswami: yes >> John Furrier: also retention and attraction thing. what are some of the hard problems that you're trying to deal with on business side? you're operating some of the core products and it sounds easy to say abstraction layer make things look easy, but these are hard problems what are the hard problems that you're solving that need to come out of this world? >> Rajiv Ramaswami: yeah and some of these are better not this product they cut across every aspect of the company so far example we as a company are trying to move towards more of a cloud oriented business model right so that's why are group is called products and cloud services and those are combined in the sense that everything that we build up the product over time most of its get software also as a service and the underlying code base and the technologies are all the same great example for example is our VMware cloud offerings right they are all built on VMware cloud foundation which is offered as a software package for our customers who want to build private clouds its also available as a service from us as well as familiar for our partners. Now, for us the notion of transforming our company to be able to do both right just products from moving products to also to being delivering cloud services has a profound impact across every function R&D for sure, go to market in terms of how you align the Salesforce to sell that all our systems that are necessary to transact that business so that's a pretty big transformation that we are going through right now. >> John Furrier: That's a lot of software that needs to be code and automation is not easy >> Rajiv Ramaswami: yeah >> John Furrier: that's why machine learning problem is hot here >> Rajiv Ramaswami: absolutely yes >> Lisa Martin: What is that balance when you are looking at innovations that come out of not just radio but the other innovation programs that VMware has about managing the balance between the R&D investment and the investment that's going to be needed on the sales and marketing side to get the product or service the solution out on the market to start really dialing up this as a big revenue contributor. How do you look at that as you talk about that portfolio a minute ago and when something becomes like say it comes out of radio and it's well, this is a really good idea, but how are you looking at balancing the R&D investment versus what you know you're going to have to do to get it to market? >> Rajiv Ramaswami: yeah and by the way that's a great point there because, you know too often engineers think about hey I've the coolest product let me go build it they don't think about how it needs to be sold and the how it needs to be sold is equally important the front more important than how you build it right. So in our world so when we do our planning on an annual basis for example we look at a holistic plan that covers the entire gamut right which means R&D, sales and marketing right and when within sales and marketing, investment across what our core sales team needs to do what our specialist sales teams you know For example some of these newer products will require specialist to sell they might be targeting different buyers within the customer base right, so we have to align our R&D and go to market investments together to create a full plan for the year and we do that for pretty much every product in our portfolio >> John Furrier: what I going to ask, I want to ask you a business question I know R&D is going to be key you guys did a great job, so Congratulations but one of the things that we're seeing in the market is new shifts in the landscape of either tech enablement or trends like kubernetes or 5G gives companies an opportunity to reset their architecture >> Rajiv Ramaswami: yes >> John Furrier: and you now see with virtualization some of the things that you guys are doing we're seeing couple pivot points for customers now one cloud native, kubernetes >> Rajiv Ramaswami: yes >> John Furrier: software - defined, your on-premise cloud operations, not C private cloud [Rajiv Ramaswami] yeah >> John Furrier: cloud and then like 5G >> Rajiv Ramaswami: yes >> John Furrier: a little bit of you know networking these are major trends >> Rajiv Ramaswami: yes >> John Furrier: how should companies start thinking? okay I have an opportunity as a catalyst to shift what what's your take on that trend advice to those customers because they might be able to do wholesale changes or migration >> Rajiv Ramaswami: Yeah, look from a customer perspective right, every one of them is going through this transformational journey and depending on you know where they are right, so if you take Telco's for example that's where the 5G applies primarily, I mean they have they go through this big capital cycles of investment that are geared towards massive technology generation size so last generation was 4G LTE and now the next thing is 5G and that is big new capital cycle and there's an opportunity at that time for them to fundamentally re-architect how they deployed their infrastructure and that's what they are doing with network function virtualization is 5G and so if 5G and we kind of go hand-in-hand together and its an opportunity too for them to go deploy a new infrastructure that is much more virtualized much more using standard hardware running everything in virtualized applications what's right the network function than they could before >> John Furrier: so the edge now is more dynamic than it was years ago so we look at 4G. What we have, what year that was, but I mean that even with healthy there's many many years ago the edge was not built out now you have a programmable intelligent, the edge market >> Rajiv Ramaswami: exactly >> John Furrier: how is 5G going to impact the Telco's? because this might be the right time for them to actually have a real business model. >> Rajiv Ramaswami: Yeah, well look I think 5G's offers them to try out many different models for example given that many the 5G radios are much more shorter range right, so your going to deploy more smaller cell sizes that means for example there's a new business model possible where you deploy radio multiple operators are sharing that radio, right where as traditionally today you know your base station so AT&T has their own, Verizon has their own tomorrow you could be okay you could have a bunch of >> John Furrier: basing radio service provider >> Rajiv Ramaswami: yeah in the buildings right here that and that could be shared by all the providers so its a completely different business model so those are the kind of things that 5G enables >> Lisa Martin: are there any projects that are being featured here talked about here at radio 2019 along the spirit of and NFP,5G >> Rajiv Ramaswami: Oh yeah there's a bunch of projects I mean on the floor right, you can go in fact even in the posters that you're sitting around here you'll see a lot of projects in 5G we have some nascent efforts on this what we call networks slicing for example >> Lisa Martin: and what is that? >> Rajiv Ramaswami: so the ability are going to share the network that you deploy a single network infrastructure and you are able to slice that into chunks and have different people use those chunks >> John Furrier: and I think that points out a trend that we've been reporting least on the queue and ways people say don't move data around move compute to the edge or software-based virtualization. You're putting basically virtualization on the radio's >> Rajiv Ramaswami: yes exact software exact edge yeah, >> John Furrier: so when you look at the marketplace when you say okay VMware, it's got a transfer over one of the things that's come up a lot we've heard on the cube is a VMware's great, they don't know networking though now of course if NSX is didn't win now we know where that comes from multiple competitors. But talk about the networking aspect of what you're doing? because, the investment in this era that's the first real SDN company there's been some SDN around before but you guys not only do SDM you got networking, you got compute, security, talk about networking in the innovations there >> Rajiv Ramaswami: yeah let me talk about the division for networking and then also how its part of all the solutions right not necessarily just a stand alone sale so networking fundamentally you know it used to be about connect, for example it used to be about connecting in the campus, your laptops and desktops into the network right it was called workgroups and then campus networking or your land campus LAN then it became Wi-Fi came in there right and the in data center it was about connecting servers to storage and servers to other servers right all about this box mentality in the branch it was about putting in a branch router and providing a network connection through that right, but if you look at fundamentally what networking is evolved to now it's about connecting, what connecting users applications and data and these could be anywhere, right. you use this could be anywhere you could be sitting in a Starbucks shop accessing your applications that are sitting in a cloud someplace not even running through your enterprise network so the notion of a classic network has changed completely. so the network now is much more, it's really a virtual network because, you don't you know its not physical plumbing anymore that matter yes you need the physical plumbing the physical plumbing is going to be provided by multiple people that you as an enterprise do not even necessarily control. You might control your campus LAN you might control your data center, but you don't control the could right, you don't control running over a service partner networked into the edge of the branch and so fundamentally now the new networking layer has to be a layer of software that really delivers and connects and secures these applications users and data and that's really the concept of SDN that's evolved into what we call the virtual cloud Network and that fundamentally is our focus and for us we're not really burdened by the fact that we have an underlying physical network business that we have to go protect and we have to go build. >> John Furrier: your software company >> Rajiv Ramaswami: we're software company >> John Furrier: so you know like Cisco you (mumbles) switches and routers that's if you don't have one on the top of them >> Rajiv Ramaswami: yeah it doesn't matter what do you have underneath right everything runs on top and so that's the fundamental philosophy now when you look at how this is now starting to get deployed of course you know and you're seeing, we started out with the data center and we started you know focusing on virtual machines connecting virtual machines now we now extend that to connecting containers. Right, you can you need to network containers right applications running in containers they need to be networked you need to network base metal machines you still have some of those leftovers right, so you've got a network do's and then you have to network applications running well >> John Furrier: its not a software question, I want to ask this is the trend who was seeing hyper convergence is proven >> Rajiv Ramaswami: yeah >> John Furrier: glass multiple things into one thing and reduces one footprint and some easier to manage the 5G and these shifts and technologies cause some give people that operating reset they're our architecture a lot of people say okay Cisco's got gear, I got UCS and other thing >> Rajiv Ramaswami: sure >> John Furrier: so how it collapse that in well? they want me to not do that you guys are kind of a different approach or do you then Cisco? >> Rajiv Ramaswami: so this is exactly what we do right so now you take the networking that we've got with virtual floor networking and you actually integrate that as part of a solution with our VML foundation okay and now what, are you have a full solution that can be deployed on any hardware right, can be Cisco UCS hardware, can be del hardware or it can be HP hardware so you essentially have a software foundation that includes compute storage, networking automation all put together in a solution that you can deploy on Prem and you can deploy in the cloud >> John Furrier: that's like super hyper convergence >> Rajiv Ramaswami: yes and in fact hyper-converged now it's not just about storage and compute anymore right that's how it started out. Its our compute storage networking all put together available not just on Prem, in a hardware appliance software that can be run on anything and extended it into the cloud that's really the new hyper-converged >> John Furrier: and that's new chanak's is plan actually, they are moving from a hardware, trying to do software. >> Rajiv Ramaswami: yeah we've always been there right. We started out with software and we've expanded that to the hybrid cloud right. Think about where we're at now we've got you know we mark Loudon AWS, we've got our four thousand plus VM cloud provider partners and increasingly more and more users >> John Furrier: so, you are saying copied you guys basically >> Rajiv Ramaswami: absolutely >> John Furrier: okay >> Lisa Martin: imitation is the highest form of flattery (laughing) >> Lisa Martin: question for you in terms of customers. You know we we're I'm sure going to hear some phenomenal successful customers at vmworld, which is just around the corner, how our customer is going to benefit from the innovation? and this is we talked about the competition, competitive nature of radio, but also the fact that one of these guys and gals are doing this in their spare time so this is really deep-rooted passionate projects we expect customers in any industry to be able to benefit from this and say the next nine to twelve months? >> Rajiv Ramaswami: yeah look I mean at the end of the day you know these are complex systems and software that we have provide and deploy all right and a lot of innovations as under the covers and we have to translate that into value propositions that resonate with the customer that they can go deploy so what's the customer trying to do right? so think about it from a customer lens in so the customer is trying to say, well okay I'm on this journey I've got for example figure out how to have a completely you know dynamic infrastructure where I can run my applications and those could be if my existing applications modern applications that I'm building and they need to be able to run flexibly anywhere I want to be able to run them on Prem I want to be able to run them in the cloud give me an infrastructure that can solve that problem and that's really what we do with our hybrid cloud solution so the and so we have solved that problem for the customer then the customer's next problem is going to be around saying that well I want that flexibility I want to use AWS, I want to use Azure, I want to use Google and every one of these has a silo by itself I've got to retrain all my people to come manage every one of these separately VMware can you help us with that and we provided consistent operations and management's control planes that work across everyone of these clubs but allowing them to solve that problem easily and networking and security we already talked about right there's notion of being able to connect the absence users and data so converting all these innovations into you know solutions that customers can use is really what we do well >> John Furrier: you know we like to put pressure on you guys and ask the tough questions we've got to say you guys have done a great job, over the past couple of years on the product tech site a lot, a lot of clarity on vCloud air get that out of the way amazon relationship now that you got vCloud foundation, things are coming together the numbers are up >> Rajiv Ramaswami: yes >> John Furrier: Boss happy everyone's happy. What's next? What's the big next journey chapter and wave you ridin? >> Rajiv Ramaswami: look I think we're still early days when it comes to the two big transformational seems to be around right. cloud in containers I think we've got all of our solutions in the market now. We have to scale and build them past talked about this mission of how to you know make these cloud delivered service bigger chunk of our portfolio going forward and then containers in kubernetes I think is a big big cloud native with a big new area for us a lot more to go when it comes to networking in times transforming networking insecurity. I do expect us to be doing more and more there in that front and on the inducer I thin on there which we didn't cover much about here there's a fundamentally massive opportunity for us with modern management on Windows right with our partnership with Dell and taking really work space one into every windows machine that's out there and you also saw that partnership announcement with Microsoft last week at deltek world a couple of weeks ago so all of that I think you know There is a lot for us to execute >> John Furrier: I just want an alienware monitor the curve monitors are so good. I want one of those. >> Rajiv Ramaswami: Oh yeah those are beautiful monitors, elite. >> Lisa Martin: Well an impressive trajectory that you have no doubt the queue will be following closely, Rajiv thank you so much for joining me on the cube VMware radio 2019 we appreciate your time >> Rajiv Ramaswami: oh thank you Lisa, thank you John glad to be here again thank you >> Lisa Martin: our pleasure for John Fourier, I'm Lisa Martin coming to you from San Francisco at VMware radio 2019. Thanks for watching (high intensity music)

from Boston Massachusetts it's the cube covering wtg transform 2018 brought to you by Winslow technology group welcome back I'm Stu minimun and you're watching the cube at wtg transform 2018 happy to welcome to the program two gentlemen from the Boston Architectural College to my left is Carl Jasperson who is the systems administrator and to his left is Jason O'Brien who's the director of IT gentlemen thanks so much for joining us thank you for having us all right so Jason why don't we start with you help us power up this conversation to tell us a little bit about the college so Boston Architectural college we started in the late 1800s it's a small design at school and we offer programs in landscape interior and traditional architecture yeah so I love that to talk to a little bit more about you know that the charter of the school and how IT fits into that so we we are a mission of the schools to provide excellent education to a diverse population technology factors in is very important and over the last ten years the Carll I've been at the school technology has use has increased immensely our students are using it more and more every year and meeting those needs has become you know difficult and it's a challenge we we strive to achieve every year well Design Thinking is is so important these days I I studied engineering as an undergrad in which I've learned more about design one of my favorite authors so I have an interview about a month ago Walter Isaacson you know the ones he studies are the ones that can take that design thinking and technology and bring them together Carles bring us up to speed on from from the IT standpoint you know how big of a team do you have what are you involved with I said you know things have been changing over the last few years yeah so I mean we've got Jason in addition to running the department he runs our online learning system I'm responsible for all the backend its infrastructure servers networking backup virtualization we recently hired a junior systems administrator to help me out we've got a web guy we've got a DBA to the woodshop is under IT because we have a fabrication guy so 3d printing laser cutting we have the help desk and the help desk manager who also does our purchasing and she and I will take escalations so it's there's not a lot of crossover you know skill crossover in the group but we managed to keep everything going yeah but as you said they've been you know woodworking not something you think of in Italy as you know an IT thing IT an OT or you know really converging a lot when you talk about manufacturing as you know we talk about sensors and IOT it's it's hitting everywhere yeah for us you know 3d printing and laser cutting and we also have a CNC router they all started as experiments at the school and have turned into a major factor in for our students it's a resource that they demand and the increasing use every single year and how we meet those demands is is becoming tricky to accomplish in our you know we're in the Back Bay real estate is very expensive and we have to make our space do amazing things Jason that's great points I mean I've talked to lots of higher education and even you talk to the K 2 through 12 it was you know what mobility has had a huge impact you know therefore stresses and strains on wireless you know how do I get devices into the classroom how do I manage it I had gentleman from bu who's here at the show last year we were talking a lot about MOOCs so you know it's that that role of i TS but it's expanding but luckily they're throwing way more money at you I'm sure well we've been flat headcount over the last eight years we lost someone last year and gain someone this year so you know we we basically have to do more with less every year like most IT departments so you know we've we redesign our spaces periodically to meet those our students needs you know and turn returning what was labs just computer labs into more flexible space where students are can move the tables around and you the computers are available sometimes there we have high end alien wares in a in a cabinet they pull out news or they can use it to make models we have they can put up their designs on a 3d TV they're using VR headsets to walk around their own designs it's really fascinating where the technologies okay I wish we could spend more time anywhere in VR stuff and everything like that our production crews gamers my son's into this stuff but but Karl I'm hearing things like space constrained we need to do more with less we need to simplify this environment wow that seems like a really good set up for kind of infrastructure modernization so how long have you guys been there about 10 years right yeah so it's a change don't want one in ten years so walk us back 10 years ago and give us that point when you went to modernize yeah well when we started there's no virtualization 3 server racks in a room in the basement for 10 years that we've been there there's been water in that room twice so that always gave us the warm fuzzies you're saying it wasn't water cooling I mean no we tried for that but it didn't you know it didn't work out last year we moved to Colo facility in Summerville so and by the time we did that move yeah we did we started virtualization with VMware like three five within a year or two of me starting and the racks got you know less and less full and now in the fall we rolled out VX rail and we're in a single rack in a data center and there's I think three physical servers in that rack that aren't the VX rail at this point so it's it's consolidation power savings stuffs in a much better physical location than it used to be moving that server room out we were able to free up that space for you know the students to be able to have it's a it's a meditation space now so it's it's been really interesting kind of going through all that great what I wanted you know we don't have a ton of time but let's talk about that VX rail was your team were you looking for HCI was it you know just time for a server refresh you know what what kind of led to that was there a specific application that you started with so this event two years ago we saw Brian from bu give this presentation on their tan and that really turns us on to the whole hyper-converged option we we worked with Winslow we actually talked to another vendor and we looked at Nutanix we looked at pivot three we looked at rolling our own you know visa non FX 2 and after kind of comparing everything and seeing the pros and cons VX rail made the most sense from management perspective and a price perspective our old cluster was coming up on the five-year mark things were going out of warranty we had ecologic sand with 7200 rpm drives one gig I scuzzy just flow for most of its life we were just doing lightweight servers and applications two years ago we needed to virtualize our database server and we threw her Knicks in there with 800 gig on VM e drives and that was a great stopgap but you know we we needed something more permanent more robust - that's how we got to be X ray from a management standpoint the hyper-converged model gave us more flexibility it's easier to expand and since we're small we're not talking about you know racks and racks working together ryote you started with just three hosts so from a overview standpoint it's easy for us as we grow to just add another node and we get the compute we get the storage and we get the memory all at once as an expansion so it's the model is just fantastic for our workload that we put on it we've got like 70 servers in there the only stuff that's not in there yet is our student file server and exchange and they're going in there in the next six months yeah yeah good great and that's so so it sounds like you're real happy with the solution you've been with Dell for four years so from an Operations standpoint was there you know a lot of steep learning curve or was this pretty straightforward and very easy I mean I was I was already really familiar with the VMware piece going into this so that you know that wasn't a big deal we were already on Ruby sphere 6 and we started in the it's row of B so 6px role manager is it's kind of a stupid easy interface you know you can go in you can see are there alerts is there an update you know can it see my hardware is all that good there's not a whole lot to learn from there if we were doing V San on our own my understanding is that some a lot more complicated to stand up once you have it going you're good until you try to make a change so the VX rail manager extract abstracts all that away and just kind of gives you the the VMware experience that you're used to yeah any commentary on the economic service you know we actually found it was very interesting because our original assessment of our own needs were there was no way we could afford all flash and we started we focused exclusively on hybrid solutions and after a certain point we saw I think a presentation from Rick on the external platform and we saw the VX rail as inline dedupe and compression with the all flash and we thought wait maybe we could make this work with all flash and so we actually had a very slight reduction in RAW storage in our new platform but the percentage that we're actually consuming is far less than on our old platform simply because of those gains and it is the performance is far far faster and it's a we've just been very pleased with the implementation from a cost perspective the all-flash VX rail came in under the hybrid pivot 3 and the hybrid Nutanix products so you know we it was a huge win from that perspective we were shocked we could be able to do it thrilled with it ok final word it sounds like you're real happy with the solution when it smoothly operates well economics were good what final takeaways would you give for your peers I mean I'd say the implementation was you know the VX rail platform the the installation is as advertised it was it's basically a wizard that walks you through the installation process the very few minor issues we encountered the winslow team and the is EMC no support support people had no problem solving for us it was really a pretty easy migration to the new platform and we were able to do it with essentially zero downtime yeah awesome well gentlemen thanks so much for joining that's the promise is to get that easy button for IT HD I definitely helping to move in that direction next time we'll get to talk a little bit more about cloud and everything like that be back with lots more coverage here from wtg transform 2018 I'm Stu minimun thanks for watching the Q

>> Announcer: From Boston, Massachusetts, it's the Cube. Covering Cloud Foundry Summit 2018. Brought to you by The Cloud Foundry Foundation, >> Hi I'm Stu Miniman and this is the Cube's coverage of the Cloud Foundry Summit 2018 here in Boston, Massachusetts. Happy to welcome back one of our earliest and favorite guests of the Cube Chad Sakac Who's at Pivotal now and he handles PKS and Dell technologies. Chad, great to see you, thanks for joining us, welcome to the Boston area, you come through this area a lot but it's great to see you. >> It's good to see you too. This is, by the way, my first CF summit. So it's interesting, you and I have talked together at Dell Technologies World, Dell EMC World, and EMC World for years. >> Stu: VMWorld. >> And VMWorld. This is a different scene. >> Alright Chad, this is my third time doing this show. I was at the first one back in 2014, last year we did the Cube there; every year it's like 'oh wait, there's this cool new technology; containers, maybe, how's Pivotal going to deal with that? This year, wait, Kubernetes, cloud natives everywhere. Maybe give us your point of view, as to how this fits in. >> So I feel like I'm a kid in a candy store. My job inside Pivotal is to drive PKS. Pivotal Container Service, that's built on top of Kubernetes. And there's a lot of Kubernetes action occurring here. If I had to net it out, I'd say a couple things. Number one, we've moved past the early hype cycle, and actually went through several hype cycles that blew up, so Docker is going to take over the world, not correct. What turned out to be correct is Docker would become the container standard, right? >> It's Mobi now, right? >> Right. Then, we went in to the battles of different cluster container managers. It's Swarm, it's Mesos Marathon, it's Kubernetes and there were lots of others, and then you get through that early hype period and things settle down to the point where they're actually productive, and everyone now kind of agrees, that Kubernetes is the standard container cluster manager for broad sets of workloads, great. Now the debate is Cloud Foundry, the structured PaaS-World, right? The structured platform opinionated, versus the little more wild west and open eco system of Kubernetes, and then early stage Kubernetes projects, like Istio and others, right? I think this has two chapters now, in front of us. Number one, and this is my focus I think for the next few years, is how do we make Kubernetes simple enough, easy enough, and frankly, enterprise ready. Not that it's not ready today, but a lot of Kubernetes projects that our customers are all over the map, difficult to sustain. We want to bring a lot of the lessons learned over the years of Cloud Foundry to Kubernetes. And I'm happy to say, that just a couple days ago, we released PKS 1.O.2 and 1.1, which we haven't announced the date but we've always said that we're going to be in constant compatibility with GKE, and the core Kubernetes. Since GKE shortly will have Kubernetes 1.10 support you can expect a 1.1 of PKS. So mission number one is make Kubernetes a great platform, and I am determined and stubborn, and will make PKS the best enterprise platform for customers that are putting workloads on Kubernetes. That said, Kubernetes isn't steady still and neither is the ecosystem. And you can see that there's a lot of discussion over what is the intersection between Cloud Foundry and Kubernetes? I think that over time it's inevitable that these things come together more. But again, I think that's going to occur over years. Not in a heartbeat. >> And even, I've been at the Kubernetes show and have been at this show a few times, it's not a monolithic stack, we're building distributed, lots of different pieces. You go to the Cloud Foundry, I'm sorry, the show that's Kub-Con, there's so many different projects there, I mean Istio was all the buzz, talk about the service national, there's all these little pieces there. And at this show, we're talking about Zip Car came and talked about they love everything in this eco system. They don't use some of the core components, but they use all these other pieces. As you and I've talked many times, Chad, people go read, Chad writes a little bit about some of these things to give you all the details there, but this stuff's pretty complicated. There's some in the Kubernetes community that's like it's never going to get simple. Remember when we thought Cloud computing was simple? And if you've been to any Amazon show and you go through, it is more complicated to configure a compute instance at Amazon, than it is to buy a Dell server these days. Because there's more options out there. Look, customers need options, many of them want things to be packaged and serviced and buy it as a service, but some love to put those pieces together and it's a spectrum and I loved at this show, Google and Microsoft up on stage, talking, 'hey, open communities, collaborating together'. Maybe not merging everything, but working together, understanding where things fit and it's not one or the other, it's many customers will choose both. >> You and I are both nerds at heart, I hope you don't take offense to that. >> I've already been doing Star Wars quotes this week. >> I wear it with pride. I'm always fascinated by the technology itself, but one thing that's been really cool about my experience alongside, and now inside Pivotal, and you can see it here at the CF Summit, is that the Pivotal obsession, is about the customer and the outcome. We build a platform that is an essential part of that, but teaching the world how to build better software is a noble mission. And the thing that's the most exciting for me is actually when the customers talk. So if you went to any of the customer discussions, did you see any of them, did you see the T-Mobile one? >> I saw T-Mobile up on the key note, I actually did an interview with T-Mobile. Had an interview with US Air Force. >> The Air Force One is amazing. >> Awesome. >> It's fascinating, from a technological standpoint, to say how do you use these tools? But it's the story of what you do with it, that actually matters so much more. I'll leave the, no, I won't leave the customer name out of it. So in talking with the T-Mobile crew, they love the Pivotal application service. So they are using it, it's an essential part of how T-Mobile works. They talked about it on stage, that's why I don't mind talking about it. And if you ask them, it's not an or. They also have massive projects, massive application workloads, that don't fit in PaaS, but are Docker images, they're currently doing some strange stuff with Swarm, and blah blah. And they're like 'Man, if you guys can basically deliver a great platform that we can consume instead of trying to construct and maintain, we trust you, you iterate with us, you work with us, we'll be able to focus more on the outcome. The thing that I'm actually going to be the most curious to hear feedback from customers over the next couple of years, is how do they navigate what workloads are best put into Kubernetes, how does Kubernetes sets of ecosystems start to not calcify, but firm up, right? It's going to be loose. But it will start to align more over time. >> Yeah our research team actually calls it, we need to get to a place where it's plastic. It should be not just scalable up and down but side to side a little bit more too. Once you have it, you can be able to go. >> Figuring out over time, and helping, with customers, figure out 'Hey, this is a Kafka or Crunchy data.' Post grass instance, or it's an ISV stack, or it's an application they've home grown, but they don't want it fully compartmentalized and put on paths, and they decide that they want to put it on Kubernetes, awesome. What is the value and the return of doing further work on that app to really make it Cloud Native, pull out all config, turn it into sets of small micro services, and then it's better fit for the PaaS part of PCF. Figuring out that formula over the next few years is going to be really cool. >> You mentioned culture. And that's been something you and I, Chad, lived through. It was the server vs the storage vs the network and the virtualization admin, and then the cloud admin. I talked to the US Air Force guy, and he was like, 'We actually have the people take off their uniforms, because rank would have a certain meaning inside there.' But you've got the Devs, you've got OPS, you've got still the infrastructure pieces on tub, what are you seeing from the customers you're talking to; what are some of the big challenges that are slowing people back from reaching this Utopia of fast, fast, fast, agile, inter-operable, wonderful times? >> How do I answer that one? That's a loaded question, brother. The biggest impediment is human nature. It's these damn humans, if we could just get all the humans out. >> Well everybody's mine, mine, mine. >> We'll go to low code, no code, eliminate all the humans, it'll be dreamy. >> I did one of those interviews today, too. Absolutely, you don't need all programmers, the business people can do it. >> The human tendency for control, and the need for control, I think it's probably deep seated in our, we're living in a world where we know intellectually that we don't have control over everything, but we hate that. Because we want to create control in our lives, that basically is the thing that sets up boundaries between people, and they get really hung up on their function. That's not new, the word's changed, like you said. Used to be server people vs storage people. Then it was virtualization teams vs the silo teams. And now it's the intersection of the DEV team and the DevOps team, the operations team. How do they intersect? The places where they're the most successful, is that they don't get hung up on that and the people blend the roles. Now the trick is, how do you do that in a big company? I wrote a blog, I'm not trying to advertise, virtualgeek.io I wrote a blog on this which was a synthesis of all the customer dialogues I've been having over the last few years. And the pattern I've seen that is most successful, is actually to recognize that there are stacks, and the stacks, I don't mean this particular technology choice, but the way that the whole stack driven by the business and the application and then the abstraction it sits on, and then you have to build your actual operations team underneath that. That creates a whole operational model which in itself is a stack, and just so it doesn't sound like I'm describing something that's nonsensical, a stack can be in big enterprises, there's a main frame based app, that's running on a main frame, that's being supported by a main frame operations team, and then right beside it there's another stack, which is all X86 workloads that are static. So they don't need an IAS they just need to run on a kernel mode VM abstraction. And then under that you've got the team that supports. Then you've got the workload that can be containerized, and don't need a full blown PaaS. And then you've got another one, which is a full blown application service model. Each one of those stacks ends up with different people, processes and tools, because they're mapped to the cultural operational model of that stack. And the thing that I'm trying to guide customers when I'm talking to them is, don't reject that; that's actually reality. Yes you should move as much as you can to the highest order abstraction you can. That's goodness and it pays dividends all the way down the stack. But don't go and say, that this workload, by definition has to go there. Or because you operate this way in this stack and this group operates this way, that by definition you're stupid and they're smart. The other rule is that- >> Chad, the answer to everything is server-less. >> By the way, I should have said that's another abstraction even to the right of the application service model. So the thing I've found, is a key kind of pattern of good, is that between the stacks, people and process are not allowed to transverse them, because the process is linked to how you operate. The only thing that goes between them, because in the end, for any customer, the stuff that touches all of those, is to become religious about one thing, which is that API's and data, and how those transit, those different stacks, that you have to be very clear on. Do you know what I mean? On the blog I drew a picture, but it was terrible. It was a terrible drawing. >> I've done whiteboards with you, Chad, I understand. Great, so. Sound's like you've got your hands full. Lots of us read the S1, so Pivotal's marching towards an IPO. You've only been there a very short time, you've know Pivotal since the beginning and all the pieces since Greenplum's part of the MC, Cloud Foundry part of VMware. Anything that you've learned since you've been inside Pivotal now that there's misconceptions? One of the things I always find is, we always learn about something the first time and then don't think it changes. >> It's funny actually, that's an insightful question. Having joined the team, it's weird because to many of them, I'm new, I'm a new Pivot. But to many of them they know that I've always been there. And I was reminding some of the originals, the crazy tortured path that we've taken to get to today. The original effort was hey, people are doing new things data's at the core of it. And that was the trigger for the Greenplum acquisition. And several of the people who are the senior leaders of Pivotal now came in through that. And then Paul Maritz was the CEO of VMware at the time, hey, I'm seeing people build new apps in new ways, by the way there's this crazy team inside VMware working on this thing called Cloud Foundry. And they were like a red headed stepchild. That's not PC, but like a black sheep? Or I don't know what metaphor you want to use, but basically they were working on something that had nothing to do with kernel mode virtualization at its core. >> Yeah it was a Cloud native peg in a VM square. >> And at the time, VMware isn't what they are now too. And then people forget this but I wrote a blog about it, so it's on the internet permanently. There was a Greenplum project, which was a great idea, that says people want to collaborate with data sets, and data scientists want to work together and it's really hard. Let's build a thing, which is like a social media portal, for Greenplum which was called Chorus. And the Chorus project was completely sideways. And they were like we don't know how we're going to get this thing on track on time, and they asked around the Valley, and people said hey, you should go talk to these guys, Pivotal Labs, up in San Francisco. What they do is they help people when they're stuck. They went, and I remember when Bill Cook and Scott Yara came back to Hoppington and said 'This was awesome, they've changed the way we think about how we build software, we think we should buy them.' And that got added, I remember when Paul Maritz said 'Spring is available.' it's like the most widely used modern JAVA framework, and that was also stuff in Spring Rif. All of these weird bits, in essence became the essence of Pivotal. You know what I've learned through that? Is these journeys are not in a straight line. Everyone's. >> Like our careers, Chad. >> Like our careers man. That's the first part, the second thing is, and this is going to be a challenge for Pivotal, honest, if we're very transparent as always, is Pivotal's brand is now so linked with Pivotal Cloud Foundry. And that's a good thing, like those customers raving about the business outcomes that they are getting. But inside Pivotal, the strategic change, the strategic pivot ha ha ha, to do a full embrace of Kubernetes versus the traditional opinionated versus plastic debates, I wouldn't say that we have 100% of the company fully embracing it yet, because companies are themselves, organic. But across the vast majority of the company it is something understood that it is an imperative for us. If we want to help the customers and the world build better software, we've got to do it for stuff that fits into PaaS, and stuff that doesn't. And so I've learned over the last few weeks about how many people share that passion that I have, and I think we can make something awesome with PKS. >> Alright, well with that Chad, we'll have to leave it there for now, looking forward to seeing you at more events. Congrats on the new role, I'm sure if people haven't already, Chad does have a new site for his blog, virtualgeek.io instead of the previous one. Chad, always a pleasure. Got the Cube here at Cloud Foundry Summit, I'm Stu Miniman, thanks for watching the Cube. (upbeat tempo)

(electronic music) >> Host: Live from Midtown Manhattan it's The Cube! Covering Big Data New York City 2017, brought to you by Silicon Angle Media, and its Ecosystem sponsors. >> Okay, welcome back everyone. We are here live, The Cube in New York City for Big Data NYC, this is our fifth year, doing our own event, not with O'Reilly or Cloud Era at Strata Data, which as Hadoop World, Strata Conference, Strata Hadoop, now called Strata Data, probably called Strata AI next year, we're The Cube every year, bringing you all the great data, and what's going on. Entrepreneurs, VCs, thought leaders, we interview them and bring that to you. I'm John Furrier with our next guest, Greg Sands, who's the managing director and founder of Costa Nova ventures in Palo Alto, started out as an entrepreneur himself, then single shingle out there, now he's a big VC firm on a third fund. >> On the third fund. >> Third fund. How much in that fund? >> 175 million dollar fund. >> So now you're a big firm now, congratulations, and really great to see your success. >> Thanks very much. I mean, we're still very much an early stage boutique focused on companies that change the way the world does business, but it is the case that we have a bigger team and a bigger fund, to go do the same thing. >> Well you've been great to work with, I've been following you, we've known each other for a while, watched you left Sir Hill and start Costanova, but what's interesting is that, I can kind of joke and kid you, the VC inside joke about being a big firm, because I know you want to be small, and like to be small, help entrepreneurs, that's your thing. But it's really not a big firm, it's a few partners, but a lot of people helping companies, that's your ethos, that's what you're all about at your firm. Take a minute to just share with the folks the kinds of things you do and how you get involved in companies, you're hands on, you roll up your sleeves. You get out of the way at the right time, you help when you can, share your ethos. >> Yeah, absolutely so the way we think of it is, combining the craft of old school venture capital, with a modern operating team, and so since most founder these days are product-oriented, our job is to think like product people, not think like investors. So we think like product people, we do product level analysis, we do customer discovery, we do, we go ride along on sales calls when we're making investment decisions. And then we do the things that great venture capitalists have done for years, and so for example, at Alatian, who I know has been on the show today, we were able to incubate them in our office for a year, I had many conversations with Sathien after he'd sold the first two or three customers. Okay, who's the next person we hire? Who isn't a founder? Who's going to go out and sell? What does that person look like? Do you go straight to a VP? Or do you hire an individual contributor? Do you hire someone for domain, or do you hire someone for talent? And that's the thing that we love doing. Now we've actually built out an operating team so marketing partner, Martino Alcenco, and Jim Wilson as a sales partner, to really help turn that into a program, so that they can, we can take these founders who find product market fit, and say, how do we help you build the right sales process and marketing process, sales team and marketing team, for your company, your customer, your product? >> Well it's interesting since you mention old school venture capital, I'll get into some of the dynamics that are going on in Silicon valley, but it's important to bring that forward, because now with cloud you can get to critical mass on the fly wheel, on economics, you can see the visibility faster now. >> Greg: Absolutely. >> So the game of the old school venture capitalist is all the same, how do you get to cruising altitude, whatever metaphor you want to use, the key was getting there, and sometimes it took a couple of rounds, but now you can get these companies with five million, maybe $10 million funding, they can have unit economics visibility, scales insight, then the scale game comes in, so that seems to be the secret trick right now in venture is, don't overspend, keep the valuation in range and allows you to look for multiple exits potentially, or growth. Talk about that dynamic, because this is like, I call it the hour glass. You get through the hour glass, everyone's down here, but if you can sneak through and get the visibility on the economics, then you grow quickly. >> Absolutely. I mean, it's exactly right an I haven't heard the hour glass metaphor before but I like it. You want to basically get through the narrows of product market fit and the beginnings of scalable sales and marketing. You don't need to know all the answers, but you can do that in a capital-efficient way, building really solid foundations for future explosive growth, look, everybody loves fast growth and big markets, and being grown into. But the number of people who basically don't build those foundations and then say, go big or go home! And they take a ton of money, and they go spend all the money, doing things that just fundamentally don't work, and they blow themselves up. >> Well this is the hourglass problem. You have, once you get through that unique economics, then you have true scale, and value will increase. Everybody wins there so it's about getting through that, and you can get through it fast with good mentoring, but here's the challenge that entrepreneurs fall into the trap. I call it the, I think I made it trap. And what happens is they think they're on the other side of the hourglass, but they still haven't even gone through the straight and narrow yet, and they don't know it. And what they do is they over fund and implode. That seems to be a major trap I see a lot of entrepreneurs fall into, while I got a 50 million pre on my B round, or some monster valuation, and they get way too much cash, and they're behaving as if they're scaling, and they haven't even nailed it yet. >> Well, I think that's right. So there's certainly, there are stages of product market fit, and so I think people hit that first stage, and they say, oh I've got it. And they try to explode out of the gates. And we, in fact I know one good example of somebody saying, hey, by the way, we're doing great in field sales, and our investors want us to go really fast, so we are going to go inside and we, my job was to hire 50 inside people, without ever having tried it. And so we always preach crawl, walk, run, right? Hire a couple, see how it works. Right, in a new channel. Or a new category, or an adjacent space, and I think that it's helpful to have an investor who has seen the whole picture to say, yeah, I know it looks like light at the end of the tunnel, but see how it's a relatively small dot? You still got to go a little farther, and then the other thing I say is, look, don't build your company to feed your venture capitalist ego. Right? People do these big rounds of big valuations, and the big dog investors say, go, go, go! But, you're the CEO. Your job is analyze the data. >> John: You can find during the day (laughs). >> And say, you know, given what we know, how fast should we go? Which investments should we make? And you've got to own that. And I think sometimes our job is just to be the pulling guard and clear space for the CEO to make good decisions. >> So you know I'm a big fan, so my bias is pretty much out there, love what you guys are doing. Tim Carr is a Pivot North doing the same thing. Really adding value, getting down and dirty, but the question that entrepreneurs always ask me and talk privately, not about you, but in general, I don't want the VC to get in the way. I want them, I don't want them to preach to me, I don't want too many know-it-alls on my board, I want added value, but again, I don't want the preaching, I don't want them to get in the way, 'cause that's the fear. I'm not saying the same about VCs in general, but that's kind of the mentality of an entrepreneur. I want someone who's going to help me, be in the boat with me, but not be in my way. How do you address that concern to the founders who think, not think like that, but might have a fear. >> Well, by the way, I think it's a legitimate fear, and I think it actually is uncorrelated with added value, right? I think the idea that the board has certain responsibilities, and management has certain responsibilities, is incredibly important. And I think, I can speak for myself in saying, I'm quite conscious of not crossing that line, I think you talk. >> John: You got to build a return, that's the thing. >> But ultimately I would say to an entrepreneur, I'd just say, hey look, call references. And by the way, here are 30 names and phone numbers, and call any one of them, because I think that people who are, so a venture capital know-it-all, in the board room, telling CEOs what to do, destroys value. It's sand in the gears, and it's bad for the company. >> Absolutely, I agree 100% >> And some of my, when I talk about being a pulling guard for the CEO, that's what I'm talking about, which is blocking people who are destructive. >> And rolling the block for a touchdown, kind of use the metaphor. Adding value, that's the key, and that's why I wanted to get that out there because most guys don't get that nuance, and entrepreneurs, especially the younger ones. So it's good and important. Okay, let's talk about culture, obviously in Silicon Valley, I get, reading this morning in the Wymo guy, and they're writing it, that's the Silicon Valley, that's not crazy, there's a lot of great people in Silicon Valley, you're one of them. The culture's certainly an innovative culture, there's been some things in the press, inclusion and diversity, obviously is super important. This whole brogrammer thing that's been kind of kicked around. How are you dealing with all that? Because, you know, this is a cultural shift, but I think it's being made out more than it really is, but there's still our core issues, your thoughts on the whole inclusion and diversity, and this whole brogrammer blowback thing. >> Yeah, well so I think, so first of all, really important issues, glad we're talking about them, and we all need to get better. And to me the question for us has been, what role do we play? And because I would say it is a relatively small subset of the tech industry, and the venture capital industry. At the same time the behavior of that has become public is appalling. It's appalling and totally unacceptable, and so the question is, okay, how can we be a part of the stand-up part of the ecosystem, and some of which is calling things out when we see them. Though frankly we work with and hang out with people and we don't see them that often, and then part of which is, how do we find a couple of ways to contribute meaningfully? So for example this summer we ran what we called the Costanova Access Fellowship, intentionally, trying to provide first opportunity and venture capital for people who traditionally haven't had as much access. We created an event in the spring called, Seat at the Table, really, particularly around women in the tech industry, and it went so well that we're running it in New York on October 19th, so if you're a woman in tech in New York, we'd love to see you then. And we're just trying to figure-- >> You're doing it in an authentic way though, you're not really doing it from a promotional standpoint. It's legit. >> Yeah, we're just trying to do, you know, pick off a couple of things that we can do, so that we can be on the side of the good guys. >> So I guess what you're saying is just have high integrity, and be part of the solution not part of the problem. >> That's right, and by the way, both of these initiatives were ones that were kicked off in late 2016, so it's not a reaction to things like binary capital, and the problems at uper, both of which are appalling. >> Self-awareness is critical. Let's get back to the nuts and bolts of the real reason why I wanted you to come on, one was to find out how much money you have to spend for the entrepreneurs that are watching. Give us the update on the last fund, so you got a new fund that you just closed, the new fund, fund three. You have your other funds that are still out there, and some funds reserved, which, what's the number amount, how much are you writing checks for? Give the whole thesis. >> Absoluteley. So we're an early stage investor, so we lead series A and seed financing companies that change the way the world does business, so up and down the stack, a business-facing software, data-driven applications. Machine-learning and AI driven applications. >> John: But the filter is changing the way the world works? >> The way, yes, but in particularly the way the world does business. You can think of it as a business-facing software stack. We're not social media investors, it's not what we know, it's not what we're good at. And it includes security and management, and the data stack and-- >> Joe: Enterprise and emerging tech. >> That's right. And the-- >> And every crazy idea in between. >> That's right. (laughs) Absolutely, and so we're participate in or leave seed financings as most typically are half a million to maybe one and a quarter, and we'll lead series A financing, small ones might be two or two and a half million dollars at the outer edge is probably a six million dollar check. We were just opening up in the next couple of days, a thousand square feet of incubation space at world headquarters at Palo Alto. >> John: Nice. >> So Alation, Acme Ticketing and Zen IQ are companies that we invested in. >> Joe: What location is this going to be at? >> That's, near the Fills in downtown Palo Alto, 164 staff, and those three companies are ones where we effectively invested at formation and incubated it for a year, we love doing that. >> At the hangout at Philsmore and get the data. And so you got some funds, what else do you have going on? 175 million? >> So one was a $100 million fund, and then fund two was $135 million fund, and the last investment of fund two which we announced about three weeks ago was called Roadster, so it's ecommerce enablement for the modern dealerships. So Omnichannel and Mobile First infrastructure for auto-dealers. We have already closed, and had the first board meeting for the first new investment of fund three, which isn't yet announced, but in the land of computer vision and deep learning, so a couple of the subjects that we care deeply about, and spend a lot of time thinking about. >> And the average check size for the A round again, seed and A, what do you know about the? The lowest and highest? >> The average for the seed is half a million to one and a quarter, and probably average for a series A is four or five. >> And you'll lead As. >> And we will lead As. >> Okay great. What's the coolest thing you're working on right now that gets you excited? It doesn't have to be a portfolio company, but the research you're doing, thing, tires you're kicking, in subjects, or domains? >> You know, so honestly, one of the great benefits of the venture capital business is that I get up and my neurons are firing right away every day. And I do think that for example, one of the things that we love is is all of the adulant infrastructure and so we've got our friends at Victor Ops that are in the middle of that space, and the thinking about how the modern programmer works, how everybody-- >> Joe: Is security on your radar? >> Security is very much on our radar, in fact, someone who you should have on your show is Asheesh Guptar, and Casey Ella, so she's just joined Bug Crowd as the CEO and Casey moves over to CTO, and the word Bug Bounty was just entered into the Oxford Dictionary for the first time last week, so that to me is the ultimate in category creation. So security and dev ops tools are among the things that we really like. >> And bounties will become the norm as more and more decentralized apps hit the scene. Are you doing anything on decentralized applications? I'm not saying Blockchain in particular, but Blockchain like apps, distributing computing you're well versed on. >> That's right, well we-- >> Blockchain will have an impact in your area. >> Blockchain will have an impact, we just spent an hour talking about it in the context our off site in Decosona Lodge in Pascadero, it felt like it was important that we go there. And digging into it. I think actually the edge computing is actually more actionable for us right now, given the things that we're, given the things that we're interested in, and we're doing and they, it is just fascinating how compute centralizes and then decentralizes, centralizes and then decentralizes again, and I do think that there are a set of things that are fascinating about what your process at the edge, and what you send back to the core. >> As Pet Gelson here said in the QU, if you're not out in front of that next wave, you're driftwood, a lot of big waves coming in, you've seen a lot of waves, you were part of one that changed the world, Netscape browser, or the business plan for that first project manager, congratulations. Now you're at a whole nother generation. You ready? (laughs) >> Absolutely, I'm totally ready, I'm ready to go. >> Greg Sands here in The Cube in New York City, part of Big Data NYC, more live coverage with The Cube after this short break, thanks for watching. (electronic jingle) (inspiring electronic music)

>> Announcer: Live from Las Vegas, it's theCUBE. Covering VMworld 2017. Brought to you by VMware and its ecosystem partner. (bouncy upbeat music) >> Welcome back to SiliconANGLE Media's production of VMworld 2017. This is theCube. I am your host, Stu Miniman. Happy to be joined for this special segment. Calling it the independent wrap analysis multi-hybrid focus with Blue Cow. Blue Cow is here. First-time guests on the program and Blue Cow has brought a few of the friends. Friends of mine, people that I got to know through this phenomenal VMware community also guest host on the program here. Been a pleasure working with all three of you. John Troyer from Tech Reckoning Justin Warren from Pivot 9 and Keith Townsend, the CTO advisor. Gentlemen, thank you so much for coming here. Now, we're independent when we come to this and I don't think any of us are shy as to kind of sharing our opinions. I think all of us have had "I can't believe what you said on Twitter" at least once. In fact, I remember when John Troyer was working for VMware I did get a call every once in awhile. I've said, if I didn't get a call at least once a year from him saying, "Hey Stu, can you moderate that a little," I'm probably not doing my job. Let's get into it. The first thing I'd say is it's 2017. We blinked and like we're getting towards the end of it. Of course, there's the big party. There's still a whole bunch of sessions going for another day. Reactions on the show, high-level things. Keith, let's start down with you. >> First off, the energy of the show this year was, I have to say it was, I have to say it was up a notch. There was a lot of uncertainty around the acquisition and even Pat's future, whether or not he would be here for the VMworld this year, as the head of VMware he announced, I think it was kind of like with a little bit of pride, that he said "This is my 5th year as CEO of Vmware" and he bought the energy Monday and I think that energy has transferred throughout all of the VMware staff and throughout the show for the past few days. >> Just in that question, of course, and how many selfies has Blue Cow done at the show? >> Not as many as usual, unfortunately, because we've been very, very busy with briefings and meetings, so we haven't had as much selfie time as we've had, but we still make time to take a few photos around the show. And, yeah, I agree with Keith. The energy this year, and I think it had started with the example that Pat set at the first keynote. Which, it's just been lifted this year and I've been saying for, I've been hearing it from a lot of different people and I've been having it in conversations as well that this year, VMware stopped apologizing for existing and it's embraced itself, and I'm sure that having the stock price hit a nice high of a 107, I'm sure that helped with Pat and his idea of, "That makes you happy. Makes it a lot easier for you to keep your job." >> That's great, there was a comment actually The first time most of us remember. The week of Vmworld? The stock actually was going up. John, you know, you've got lots of experience with this community; your take. >> Certainly more energy than last year. I mean, let's look at the micro and the macro. There's always tactical stuff going on. Last year, Vster 6.5 had not been released. Dell acquisition and nobody was sure what was going on exactly. This year, the big VMware cloud on AWS announcement, I think, is an acknowledgement of maybe, that we can talk about. That, wait a minute. Once you get down to the nitty-gritty plumbing infrastructure layer, you still need to partner with somebody like VMware. I think the industry and the analysts, and the market, that's one of the things they like and then look at the macro trends on the economy. If you look at the Expo floor this year? Huge, lots of money being spent, lots of vendors here. There's something macro going on as well with the people here. >> Let's talk about two things I look at. Did VMware meet expectations? Was it what you expect? And, what are we going to be looking back at when we come here? John, I'll start with you, you hit on the big topic from my standpoint, looking at VMware and AWS. What will VMware look like in the future? Are they going to be a SAS provider? How does that transition from an infrastructure software company to a different fit for how they do cloud today versus the whole Vcloud era and everything before it? That was era not error even though, you know... >> Hey, they had a lot to do, of messaging and a lot of product-in announcements and a lot of introductions this week. I don't know, let's give them a B for that because there were a lot of them and they had a lot to do in a short space especially, like, through the lens of say the keynotes which is the lens a lot of people have. I think AWS, VMware Cloud on AWS is the big story. I don't know, I predict that in a year or two VMware will probably be the biggest VMware hoster service provider, right? I think a lot of workloads are going to shift into the AWS service through VMware and that will happen to excess capacity. It'll happens through a lot of different things. But, that's my prediction. >> I'm sorry, you say VMware will-- >> VMware will be the largest VMware hoster within a year or two. >> I feel like I'm watching the NFL Network. Bold predictions, here we have it. VMware has got 4500 partners, John. I've have Ajay Patella on a couple of times talking about his tiers of partners and everything like that. But let's let some of the guys weigh in. >> I'll extend on that, I kind of agree. I think that there's a lot of customers who will basically do a lift and shift and use cloud and I think having to choose between which of their children is the most beautiful and which one they love more has been has been really tearing them apart and I think that now they don't have to make that choice. I think they're going to be a lot easier for, particularly CIOs, to just say, "Yep, I'm doing some cloud." The announcement on Tuesday sort of felt a little flat for me because they were talking about Google container services which is running on Pivotal. Pivotal's sort of an unappreciated part of the whole portfolio, I think. There's a lot of companies some really interesting software development work there. But, as we mentioned, the development community? That's not this community. This is much more about infrastructure people. That kind of whole announcement and what they were talking about on Day 2? Just kind of went, it felt a little bit off for me. >> Yeah, I want to echo, I think a couple of statements that you've made. One, that VMware's seemed to embrace... Monday, they seem to embrace being VMware. You know what? We may pick on the concept of VMware VSphere being cloud. That VMware is very proud of calling their SDDC strategy which is an important strategy. It adds a lot of value to, not just legacy IT but current things that people are doing in their data center and they embraced being what they do well on Monday, and then we had cloud pizza on Tuesday which kind of broke that but I think I loved the message for VCF, VMware Cloud Foundation, this concept, this reference architecture, this validated design that I can run in my data center. I know that at a Rax pace, at a CNF such as... take your Switch, take your choice between Switch and CenturyLink, etc. I'm going to get that consistent openstack what should have been openstack filling across cloud providers, but John, I agree with you. AWS is AWS at the end of the day and it's a easy checkbox to say VMware Cloud on AWS? Really easy to do and it's easy to consume. I don't have to go and choose between Cloud providers. >> One of the things of this show is that there never enough hours in the day, even Vegas. I actually have to admit I got to bed at a reasonable hour every night. We still have one more night for me here so we'll see on that. Hallway conversations, parties, some of the really cool stuff on on the show floor we talked about a little. I'll start off with kind of, from a customer standpoint, Some customers I talked to; a number of them seemed to be, "I want to move faster. "I'm interested in trying new things "and price isn't necessarily number one on my list. "It's further down the list." Which reminds me: It's not quite there yet but I go to Amazon Reinvent and this will be the fifth year and we are doing the Cube at that show. That's the thing that really excites me. There's cool new things we're trying. I echo and agree with a lot of what you all said about Day 2. Most of the customers here aren't ready for PKS. Sure Pivotal has lots of customers that are using Vmware, but the average attendee's not there. Kind of a wild card, customer insights, cool parties, things there. John, do you want to start down on your end? >> Sure, my channel check and the most surprising thing that I saw this week were talking to SC's from VMware and saying that their customers were coming to them and asking "Help? I now have Kubernetes in the house. "What do I do with it?" That surprised me. I have been a Kubernetes and Container advocate but a skeptic as far as adoption and at least anecdotally the folks that I talk to, it sounds like actually it's now trickling its way and kind of to the mainstream to where the VMware accounts are going to be able to have to deal with it. Now I will say on the flip side, Stu, if you look out at the show floor there are no developer tools, dev ops tools, cloud tools, maybe some cloud tools. That side of, that AWS side of the house, the people that are there, those companies that are there who are not here. If you were a customer, if you were an IT person looking to, this year, finally, educate yourself on how to do that that wasn't here at this show. >> For me, it's been about migration. This is about we have a whole bunch of stuff running on VMware, it's already there and that was one of the reasons VMware was popular in the first place, was that you could take stuff you already doing and you can virtualize it and then you could increase the capacity utilization that you have and you could get some more efficiencies out of that and then people started to layer additional services on top of that and to do interesting an new things on that. It allowed them to do that because it kind of freed up some time. I think we're going to say that again as things start to move to the cloud people start to do them in different ways. the workloads will migrate. It's not just going to happen tomorrow and some of the things that we're seeing, one of the things that impressed me about the show was a company called Densify who had been around previously. They were called Server and they did a rebrand and repossession and nailed it and it's a very, very simple tool that actually sells about the business. It's not about a technology, they don't actually talk about how the thing works or what's going on underneath it. But it allows you to understand the effect of what's happening if you move from VMware here over to that cloud, this cloud or the other cloud and it shows you the pricing. I looked at that and just went I can walk into a CFO and I can sell them on the idea just showing them this. That kind of experience, I think, we're going to start seeing a lot more of that as people moved to the cloud. >> So Monday gave me a new catch phrase for VMworld. VMware moves at the speed of the CIO and, you know what? With hallway conversations I still talk to, John, I don't remember like one-third of the attendees of VMworld are all first-time attendees, I talked to a lot of first-time attendees and it's amazing because VMware has an enormous sales team and they are very aggressive getting to accounts and talking about the overall message. I had people coming up to me and saying "Man you know what, I just found out about this "vRealize Log Insight and it's amazing!" and I'm thinking, Wow, that doesn't get much much more traditional IT than log management with vRealize and you know VMware has preached that for the past 5 or 6 years at the show I think it just shows the Delta in the community from those looking to do the developer, dev ops and cloud-native integration. Us, as analysts, pushing VMware saying, "Hey, what's your digital transformation story? "It's something other than cloud pizza," to all the way, to the keeping the lights on with SAP and Oracle apps that will not change and haven't changed and probably won't change for the next 10 to 15 years. >> Yeah and actually it brings up an interesting point; I had a conversation with Pumela this morning and we were talking about how it used to be, come to the show and it's the virtualization show. Now, It's a pretty broad ecosystem and in some ways it's, I wouldn't say fragmented but I'm grasping for a better word because you walk through the show floor and Dentrify, interesting. We had one of their co-founders on as to that kind of cloud management, and how all those pieces, these big hairy issues that people are solving. We've got people working at analytics and data. You've got all the cloud pieces, security all over the place, networking, we've always had storage at the show. But I'd been a little jaded coming to VMworld. It's now my 8th year and I've kind of re-energized this year. I know that some people have stopped coming. There's a new influx coming in. Let's fast-forward to VMworld 2018. What are you hoping to see from this ecosystem? Any final things you'd want to say? "Hey, this is what we can do better?" Or, "This thing, Do it absolutely again especially!" We've got one more year in Vegas then I think we'll probably go back to San Francisco. You've all been to many of these. Where do we start? >> I'll take two. One, is I like'd to see more basketball players and rappers. We had a lot of them on. >> Did you hang with KD? >> I did not. I was busy. He called my people and I don't know if you want tee that one up, what that one is. >> You could mention that absolutely. >> Sure. I mean Rubrik was here winner of the Best of Show of VMworld. Also spent a lot of marketing dollars on Kevin Durant who was also an investor and also Henson Nischlak >> Did they make cards? I'm on a trading card. How hilarious is that? >> Keith: Trading cards were cool, I have one. >> Yeah. Absolutely. >> They came to play and and they bought it this year. Marketing dollar spent, I actually have a second predication which is that next year or the year after we'll be talking about, it seemed like VMware and Red Hat are throwing down against each other so I think next year we might be talking about the Dell technologies Red Hat wars in the cloud. >> Open source comes up but hadn't been discussed much except we did some Red Hat interviews here. Red Hat? Absolutely. Hybrid cloud environment, Microsoft, VMware, and Red Hat all players there. John's been thinking about this wrap for a while I know. >> Well I'm going to switch completely differently and into the future what I like to see just to shake it up a little bit. I don't think we should talking about AWS things around containers. I think there will be some of that conversation but what I want to see is that VMware starts hosting a function service. I want to see functions on VMware because I reckon that's where the industry is going to move to in the long time. >> Stu: Serverless, you're saying? >> Yeah, Serverless. >> Like I mentioned on Day two? >> I want to see a functions as a service on VMware on AWS. >> Oh, that will happen. >> There you go product management. That's what you can go build. >> You can tie it into Lambda right now, right? You'll have your... >> yeah but if you're tie it into Lambda that just plays right into AWS's hands. >> Give Chris Wolfe a call and Kit Colbert will make that happen. >> You know what? Full disclosure. I was part of judging for best of VMworld and Rubrik won Best of VMworld. I don't want to see more data protection. I don't want to see more secondary storage. I think one of the driving elements that part of that discussion, pulling back the onion a little bit was about redefining something in the data center that had been forgotten, that API level access Rubrik pushes API level access to the data center. This is something that I've asked from VMware forever which is to basically be the API to my data center. You may not ever, I may never get function as a service. I may never get PaaS, I may never get all these cool things from a developer perspective that I want from VMware but at the very minimum, you're the software defining data center. I want to have APIs into the data center and that data center is not just my physical Data Center but this whole VCF thing that's pushed whether it's in my data center, in Rackspace, or some other VCAMP partner or in AWS. My interface, If infrastructure is going to continue to be VMware's customer then you should enable me from an API perspective to manage my software-defining data center, believe it or not. >> Unfortunately, I love to chat with these gentlemen for hours at a time if I can. We're limited with the queue. We only give you a taste of what's happening at these shows if I've mentioned before, you need to come to these kind of events to talk to these quality people. We also mentioned a few of the sponsors on the show. Sponsorship helps us bring, not only the Cube to the event, but helps me bring high quality, independent analysis from gentlemen like this. Please check out all of our sponsors. Check out all of our content on theCUBE.net. These, all three of them, creating a lot of content. Go to their Twitter handle, @ctoadvisor, @jpwarren, and @jtroyer, I'm @stu. Thank you so much for joining us for our coverage of VMworld 2017. Reach out to all of us. Really, we'll get back to you. Love to hear your feedback. Thank you so much for watching theCUBE. [bouncy techno music]

>> Announcer: Live from Las Vegas, it's the CUBE covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. >> Hello, everyone, and welcome to the CUBE's special presentation of HPE Hewlett Packard Enterprise Discover 2017. I'm John Furrier and my cohost Dave Vellante. For three days of wall to wall coverage. This is our intro section of our three days of Hewlett Packard Enterprises transformation and coverage. This is our seventh year covering HPE Discover, formerly HP Discover after the split. Lot of commentary today. We have seen HP over the years transform. We've been watching this, sort of a front row seat to HP, now HPE, really getting hammered in stock market their last earnings again didn't meet expectations, but this is not a quick turn around. I mean, this is a market place that's shifting. HP's had their plan now for multiple years. We're going to cover it for three days. But interesting. The world is turning. You had tweeted this morning on a Twitter storm you put together @dvellante, twitter.com. So it's Dvellante. Everyone should check it out. But it really highlights it. True private cloud, or private cloud, cloud has impacted everything. HP's kind of shifted their cloud strategy. It's becoming clear what they're doing, but private cloud, true private cloud, is legit. It's a 250 plus billion dollar market opportunity, as you guys have put it out on wikibond. Hybrid cloud is very relevant, and on the horizon is multi-cloud, the ability for customers to use multiple clouds. And on top of that we have machine learning, AI, and a myriad of things. Marketplace is shifting significantly, HP has been transforming significantly over the past five plus years. Your thoughts this year at HPE Discover and marketplace conditions and are they poised for success? >> Well, John, we're in the fifth year now of the turnaround that Meg Whitman initiated, and I think it's the light at the end of the tunnel year. HPE-- We've said many times at theCUBE that HP has the strength to grow. Well, it's certainly shrunk. They're about a 50 billion dollar company with a 26 billion dollar market cap, and there's a way to eek out some growth. If you separate all-- Call it Remain Co. Like the remaining company. Take out the software, take out EDS, take out actually tier one, tier one customer who's-- who's not buying as many servers as possible, or as they had previously, and the company grew about one percent. So what you're seeing, John, is some quarters HP grows a little bit, some companies it shrinks a little bit, but essentially it's facing what most legacy hardware companies are facing. Legacy hardware's down, everybody's scrambling to what we call true private cloud, which is essentially hybrid IT, trying to mimic the public cloud. And then HP adds in a dose of IOT at the edge, and then, really importantly, services. Services have never been more important for this company, and that is what I called earlier Remain Co. The remaining HP. Once it jettisons the software business this fall, that's what will be left, basically a 50 billion dollar company with about 55,000 employees. >> I was looking at a-- some IOT stories just last night, and a Business Insider article came up. It was an image, and it had listed the companies that-- by average age. And you had, obviously, Facebook, average age like 28. HP was at the highest end, like 39. And I want to bring up this notion of changing market because HP has always been customer focused, so the question is, if they are truly customer focused, as is Amazon, for instance, we talked to Andy Chasey, he talks about that all the time. And the context of where you've been and where you're going, historical legacy, declining markets, say servers for instance. And where you're going. It brings up an interesting point. And notable is recently Amazon web services hired Gosling, the founder of Java, which had a big conversation on the internet around age. A lot of the winners are older systems guys. So what's interesting is I actually look at that Business Insider article and saying actually age is a wisdom point now, because right now HP's got to solve customer problems. In addition to transforming themselves, they're looking at a customer base that's changing their requirements, so having experience is actually a good thing, as pointed out by some of the big leaders right now in hyperscale are old m systems guys. This is an opportunity for HP, and I think that's where I want to get your thoughts on. Are they customer focused in your mind, and if they are going to be, continue to be, what should their customer focus be? >> Let's talk about what customers are doing. So, first and foremost, customers are deinvesting in non-differentiated, you know, hardware maintenance and provisioning, okay. So they're shifting IT labor from provisioning luns and servers into digital transformation initiatives, so that's sort of one piece. The other pieces there as they're shifting those resources in places up the value stack. So it's applications; it's, as you say, digital transformation services; it's new IOT activity. So they're only investing-- from the HP standpoint, HP's an infrastructure company. They're only investing in infrastructure that looks like public cloud and can focus on hybrid. So are they customer focused? Yes. And what are they doing there? So they're investing in MMA, they're doing some MMA tuck ins. They're focused on develop-- delivering platforms with an API that are essentially programmable infrastructure. And very importantly, they're in a low margin business now. It's sort of low 30 percent gross margin business. So they have to get volume. How do they get volume? How do they reach those customers? Partners. So you are seeing a new partner emphasis. You know, are they customer focused? Yes, but they're really right now partner focused to reach those customers and increase their scale and coverage. That is a critical difference between the new HP, not that they always didn't have partners, now partners are critical to their success. >> One of the things that's the theme here is simplifying hybrid IT and I think from a customer standpoint, simplifying that is going to be critical. At the same time, creating new services opportunities. So I want to get your thoughts on the top story, at least from my perspective, here at the show at HPE Discover, and that is, is it better to be big or small? And HP has a strategy of a collection of small, nimble, agile business units. Dell EMC, for instance, has a strategy of being big and using leverage and supply chain and what not. Two different strategies. We pointed that out on the web. Certainly we've heard a lot of different approaches. Your thoughts on HP's strategy vis a vis bigger and better, or smaller and nimbler is better. >> Well, HP's not small. Hewlett Packard Enterprises is still big. I mean, it's a, it's a company that's twice the size, or more, than EMC was at its peak. So it's still a very, very large company. The difference is, John, I think they're focused. So they really are focused on hardware and infrastructure, the support, you know, the digital transformation, whatever you want to call it. The big question I have, John, is now that HP is getting rid of its software business, its outsourcing and EDS business, what is HP going to do with regard to software and services. So, they reinvented the whole services organization. The big question mark for me is software. Will they get into this, what you call inter-clouding business? Software to manage multiple clouds. It's a wide open space, everybody's going after it, and I haven't heard much from HP there. So what is their software strategy? Now, the other thing I'll add, is the good thing about being smaller is that it's going to generate cash for them. So they're going to get, going to get cash out of the spin merge with CSC. They're going to get cash out of the spin merge with MicroFocus. And you've already seen HP become more aquisitive with the Simplivity acquisition, certainly with Nimble recently, previously the Aruba acquisition, and some other tuck ins. That's critical in order for HP to reposition and continue to grow. >> Yeah, and my take on HP right now is they got to be more assertive. Their voice in the marketplace, at an industry level, has to be very assertive and relevant. I think that's something you've got to put the stake in the ground and hammer that home. I think we got the piece parts, and I think the spin merge is not a "they're getting out of that business." They're just decoupling from the monolithic entity that was HPE and creating kind of cohesive entities. And I think there's a strategy, in my opinion, that looks really strong there in the sense that, hey, at the end of the day, it's going to be a services game. And if you look at the IOT Edge, to me that's the tell sign of the marketplace. As the value shifts from IT-- So, simplifying IT, having true private cloud, having some hybrid pathways for IT, maybe a declining market from a service perspective, but simplifying that and operationalizing that and shifting the value to the Edge with services is a huge opportunity for HP. This is something that not a lot of people on Wall Street are kind of rocking at this point. But the value shift from IT, centralized IT, to a distributed kind of network effect is a really interesting play. And I think this a bet I think HP's making from my standpoint, and that's where the intelligent Edge piece comes in. If they could nail that, and layer on the services, and bring real value paths for customers with outcomes that are, not pie in the sky-- Sure, they throw some AI in there, machine learning, it's all relevant. Getting into open source. Taking that labs machine and memster technology and bringing that out at an appropriate timing. With the services in place. I think that's a good strategy for HP. >> Well, you mentioned Wall Street. Look, Wall Street is very tactically focused on the quarter and the margin decline, and, you know, D-Ram prices doubled in January, okay? So a company like HPE is going to get hurt by that. So that's head winds for these guys, these currency head winds. The stock, the price will go up and down. But the point I want to make, John, is there's a new competitive reality. CIOs have woken up to open source and cloud. And as a result, we've emerged into a new competitive dynamic where HPE is competing with Dell. It's competing with China, and it's competing with AWS. And it's one different-- Two differentiable advantages or services, you know, clearly HP's doubling down on services. I'll actually add a third. The second is partnerships, and the third big one, which is green field, is an ecosystem around IOT and what they call the intelligent edge. >> Well, Dave, great commentary. My, again, my feeling is customer focus at an industry level, having the right product mix that's relevant in the, for the solutions customers want. And also their partners. Leveraging that partner network. Really going to be a two pivot points for me. I see that as great leverage for HP. At the end of the day, everyone talking about declining market of servers and storage. I actually don't see that. There's more computers available now, more storage available. The key is can that shift to true private cloud, which again is a 250 billion dollar market, partly declining. And hybrid cloud is certainly growing. So, declining and growing, I mean they're all different perspectives, and I think HP's messaging here-- Come the end of the show, we're going to look at that and understand and impact and unpack that, that analysis. So, I'm Jeff Furrier, Dave Vellante. Day one of coverage, of three days of wall to wall coverage at HPE Discover 2017. More live coverage after this short break. (upbeat music)