>> Announcer: Live from the Bill Graham Auditorium
in San Francisco, it's theCUBE
covering Pure Storage Accelerate 2018,
brought to you by Pure Storage.
(bright music)
>> Welcome to theCUBE.
We are live at Pure Storage Accelerate 2018.
I'm Lisa Martin also known as Prince for today
with Dave Vellante.
We're at the Bill Graham Civic Auditorium,
really cool, unique venue.
Dave, you've been following Pure for a long time.
Today's May 23rd, they just announced
FY19 Q1 earnings a couple days ago.
Revenue up 40% year over year,
added 300 new customers this last quarter
including the Department of Energy, Paige.ai,
bringing their customer tally now up to about 4800.
We just came from the keynote.
What are some of the things that you've observed
over the last few years of following Pure
that excite you about today?
>> Well Lisa, Pure's always been a company
that is trying to differentiate itself from the pack,
the pack largely being EMC at the time.
And what Pure talked about today,
Matt Kixmoeller talked about,
that in 2009, if you go back there,
Fusion-io was all the rage,
and they were going after the tip of the pyramid,
and everybody saw flash, as he said, his words,
as the tip of the pyramid.
Now of course back then David Floyer in 2008
called that flash was going to change the world,
that is was going to dominate.
He'd forecast that flash was going to be cheaper
than disk over the long term,
and that is playing out in many market segments.
So he was one of the few
that didn't fall into that trap.
But the point is that Pure has always said,
"We're going to make flash cheaper than
"or as cheap as spinning disk,
"and we're going to drive performance,
"and we're going to differentiate from the market,
"and we're going to be first."
And you heard that today with this company.
This company is accelerated to a billion dollars,
the first company to hit a billion dollars since NetApp.
Eight years ago I questioned if any company would do that.
If you look at the companies that exited the storage market,
that entered and exited the storage market
that supposedly hit escape velocity,
10 years ago it was 3PAR hit $250 million.
Isilon, Data Domain, Compellent,
these companies sold for between $1 and $2.5 billion.
None of them hit a billion dollars.
Pure is the first to do that.
Nutanix, which is really not a storage company,
they're hyper-converged infrastructure,
they got networking and compute, sort of,
hit a billion, but Pure is the the first pure play,
no pun intended, storage company to do that.
They've got a $5 billion evaluation.
They're growing, as you said, at 40% a year.
They just announced their earnings they beat.
But the street reacted poorly
because it interpreted their guidance as lower.
Now Pure will say that we know
we raised (laughs) our guidance,
but they're lowering the guidance
in terms of growth rates.
So that freaks the street out.
I personally think it's pure conservativism
and I think that they'll continue to beat those expectations
so the stock's going to take a hit.
They say, "Okay, if you want to guide lower growth,
"you're going to take the hit,"
and I think that's smart play by Pure
because if and when they beat they'll get that updraft.
But so that's what you saw today.
They're finally free cash flow positive.
They've got about a billion dollars in cash
on the balance sheet.
Now half a billion of that was from a convertible note
that they just did, so it's really not
coming from a ton of free cash flow,
but they've hit that milestone.
Now the last point I want to make, Lisa,
and we talked about this,
is Pure Storage at growing at 40% a year,
it's like Amazon can grow
even though they make small profit.
The stock price keeps going up.
Pure has experienced that.
You're certainly seeing that with companies like Workday,
certainly Salesforce and its ascendancy,
ServiceNow and its ascendancy.
These companies are all about growth.
The street is rewarding growth.
Very hard for a company like IBM or HPE
or EMC when it was public, when they're not growing
to actually have the stock price continue to rise
even though they're throwing off way more cash
than a company like Pure.
>> Also today we saw for the first time
the new CEO's been Charlie Giancarlo,
been the CEO since August of 2017,
sort of did a little introduction to himself,
and they talked about going all in
on shared accelerated storage,
this category that Gartner's created.
Big, big focus there.
>> Yeah, so it's interesting.
When I look at so-called shared accelerated storage
it's 2018, Gartner finally came up with a new category.
Again, I got to give credit to the Wikibon guys.
I think David Floyer in 2009 created the category.
He called it Server SAN.
You don't know if that's David, but I think
maybe shared accelerated storage's a better name.
Maybe Gartner has a better V.P. of Naming
than they do at Wikibon,
but he forecast this notion of Server SAN
which really it's not DAS, it's not SAN,
it's this new class of accelerated storage
that's flash-based, that's NVMe-based,
eliminates the horrible storage stack.
It's exactly what Pure was talking about.
Again, Floyer forecast that in 2009,
and if you look at the charts that he produced back then
it looks like you see the market like this going shoom,
the existing market and the new market just exploding.
So Pure, I think, is right on.
They're targeting that wide market.
Now what they announced today
is this notion of their flash array for all workloads,
bringing NVMe to virtually their entire portfolio.
So they're aiming their platform at the big market.
Remember, Pure's ascendancy to a billion
really came at the expense of EMC's VMAX and VNX business.
They aimed at that and they hit it hard.
They positioned flash relative to EMC's either spinning disk
or flash-based systems as better, easier, cheaper,
et cetera, et cetera, and they won that battle
even though they were small.
Pure's a billion, EMC at the time was $23, $24 billion,
but they gained share very rapidly when you see the numbers.
So what they're doing is basically staking a claim, Lisa,
saying, "We can point our platform
"at the entire $30, $40, $50 billion storage TAM,"
and their intention, we're going to ask
Charlie Giancarlo and company,
their aspiration is to really continue to gain share
in that marketplace and grow significantly faster
than the overall market.
>> So they also talked about
the data-centric architecture today
and gave some great examples of customers.
I loved the Domino's Pizza example that they talked about,
I think he was here last year,
and how they're actually using AI at Domino's
to analyze the phone calls using this AI engine
to identify accurate order information
and get you your pizza as quickly as you want.
So not only do we have pizza
but we were showered with confetti.
Lot of momentum there.
What is your opinion of Pure,
what they're doing to enable companies
to utilize and maximize AI-based applications
with this data-centric architecture?
>> So Pure started in the what's called block storage,
really going after the high-volume,
the transaction OLTP business.
In the early days of Pure
you'd see them at Oracle OpenWorld.
That's where the high-volume transactions are taking place.
They were the first really, by my recollection,
to do file-based flash storage.
Back in the day it was you would buy EMC for a block,
you'd buy NetApp for file.
What Pure did is said, "Okay, let's go after
"the biggest market player, EMC,
"which we'll gain share there in block,
"and then now let's go after NetApp space and file."
They were again the first to do that.
And now they're extending that to AI.
Now AI is a small but growing market,
so they want to be the infrastructure
for artificial intelligence and machine intelligence.
They've struck a partnership with Nvidia,
they're using the example of Domino's.
It's clearly not a majority of their business today,
but they're doing some clever things in marketing,
getting ahead of the game.
This is Pure's game.
Be first, get out in the lead, market it hard,
and then let everybody else look like they're following
which essentially they are
and then claim leadership position.
So they are able to punch above their weight class
by doing that, and that's what you're seeing
with the Domino's example.
>> You think they're setting the bar?
>> Do I think they're setting the bar?
Yeah, in many respects they are
because they are forcing these larger incumbents
to respond and react
because they're in virtually all accounts now.
The IT practitioners, they look at
the Gartner Magic Quadrant, who's in the upper right,
I got to call them in for the RFP.
They get a seat at that table.
I would say it was interesting
hearing Charlie speak today and the rest of the executives.
These guys are hardcore storage geeks,
and I mean that with all due respect.
They love storage.
It kind of reminds me of the early days of EMC.
They are into this stuff.
Their messaging is really toward
that storage practitioner, that administrator.
They're below the line but those are the guys
that are actually making the decisions
and affecting transactions.
They're touching above the line
with AI messages and data growth and things like that,
but it's really not a hardcore CIO, CFO, CEO message yet.
I think that will come later.
They see a big enough market
selling to those IT practitioners.
So I think they are setting the bar
in that IT space, I do.
>> One of the things I thought that they did well
is kind of position the power of data where,
you know people talk about data as fuel.
Data's really a business catalyst
that needs to be analyzed across
multiple areas of a business simultaneously
to really be able to extract value.
They talked about the gold rush, oh gee, of 1849
and now kind of in this new gold rush
enabling IT with the tools.
And interestingly they also talked about
a survey that they did with the SEE Suite
who really believe that analyzing data is going to be key
to driving businesses forward,
identifying new business models, new products, new services.
Conversely, IT concern do we have the right tools
to actually be able to evaluate all of these data
to extract the value from it?
Because if you can't extract the value from the data,
is it, it's not useful.
>> Yeah, and I think again, I mean to,
we give Pure great marketing,
and a lot of what they're doing,
(laughs) it's technology, it's off-the-shelf technology,
it's open source components.
So what's their differentiation?
Their differentiation is clearly their software.
Pure has done a great job of simplifying
the experience for the customer, no question,
much in the same way that 3PAR did 10 or 15 years ago.
They've clearly set the bar on simplicity, so check.
The other piece that they've done really well is marketing,
and marketing is how companies differentiate (laughs) today.
There's no question about it
that they've done a great job of that.
Now having said that I don't think, Lisa, that storage,
I think storage is going to be table stakes for AI.
Storage infrastructure for AI is going to have to be there,
and they talked about the gold rush of 1849.
The guys who made all the money
were the guys with the picks and the axes
and the shovels supplying them,
and that's really what Pure Storage is.
They're a infrastructure company.
They're providing the pickaxes and the shovels
and the basic tools to build
on top of that AI infrastructure.
But the real challenges of AI are where do I apply
and how do I infuse it into applications,
how do I get ROI,
and then how do I actually have a data model
where I can apply machine intelligence
and how do I get the skillsets applied to that data?
So is Pure playing a fundamental catalyst to that?
Yes, in the sense that I need good, fast, reliable,
simple-to-use storage so that I don't have to waste
a bunch of time provisioning LUNs and doing all kinds of
heavy lifting that's nondifferentiated.
But I do see that as table stakes in the AI game,
but that's the game that Pure has to play.
They are an infrastructure company.
They're not shy about it,
and it's a great business for them
because it's a huge market where they're gaining share.
>> Partners are also key for them.
There's a global partner summit going on.
We're going to be speaking, you mentioned Nvidia.
We're going to be talking with them.
They also announced the AIRI Mini today.
I got to get a look at that box.
It looks pretty blinged out. (laughing)
So we're going to be having conversations
with partners from Nvidia, from Cisco as well,
and they have a really diverse customer base.
We've got Mercedes-AMG Petronas Motorsport Formula One,
we've got UCLA on the CIO of UCLA Medicine.
So that diversity is really interesting
to see how data is being,
value, rather, from data is being extracted and applied
to solve so many different challenges
whether it's hitting a race car around a track
at 200 kilometers an hour to being able to extract value
out of data to advance health care.
They talked about Paige.ai, a new customer that they added
in Q1 of FY19 who was able to take analog cancer pathology
looking at slides and digitize that
to advance cancer research.
So a really cool kind of variety of use cases
we're going to see on this show today.
>> Yeah, I think, so a couple thoughts there.
One is this, again I keep
coming back to Pure's marketing.
When you talk to customers,
they cite, as I said before, the simplicity.
Pure's also done a really clever thing
and not a trivial thing
with regard to their Evergreen model.
So what that means is you can add capacity
and upgrade your software
and move to the next generation nondisruptively.
Why is this a big deal?
For decades you would have to actually
shut down the storage array,
have planned downtime to do an upgrade.
It was a disaster for the business.
Oftentimes it turned into a disaster
because you couldn't really test
or if you didn't test properly
and then you tried to go live
you would actually lose application availability
or worse, you'd lose data.
So Pure solved that problem with its Evergreen model
and its software capability.
So its simplicity, the Evergreen model.
Now the reality is typically you don't have to
bring in new controllers
but you probably should to upgrade the power,
so there are some nuances there.
If you're mixing and matching different types of devices
in terms of protocols there's not really tiering,
so there's some nuances there.
But again it's both great marketing
and it simplifies the customer experience
to know that I can go back to serial number 00001
and actually have an Evergreen upgrade
is very compelling for customers.
And again Pure was one of the first
if not the first to put that stake in the ground.
Here's how I know it's working,
because their competitors all complain about it.
When the competitors are complaining,
"Wow, Pure Storage, they're just doing X, Y, and Z,
"and we can do that too,"
and it's like, "Hey, look at me, look at me!
"I do that too!"
And Pure tends to get out in front
so that they can point and say,
"That's everybody following us, we're the leader."
And that resonates with customers.
>> It does, in fact.
And before we wrap things up here
a lot of the customer use cases that I read
in prepping for this show
all talked about this simplicity,
how it simplified the portability, the Evergreen model,
to make things much easier to eliminate downtime
so that the business can keep running as expected.
So we have a variety of use cases,
a variety of Puritans on the program today
as well as partners who are going to be
probably articulating that value.
>> You know what, I really didn't address the partner issue.
Again, having a platform that's API-friendly,
that's simple makes it easier to bring in partners,
to integrate into new environments.
We heard today about integration with Red Hat.
I think they took AIRI.
I think Cisco's a part of that partnership.
Obviously the Nvidia stuff which was kind of rushed together
at the last minute and had got it in
before the big Nvidia customer show,
but they, again, they were the first.
Really made competitors mad.
"Oh, we can do that too, it's no big deal."
Well, it is a big deal
from the standpoint of Pure was first, right?
There's value in being first
and from a standpoint of brand and mindshare.
And if it's easier for you to integrate with partners
like Cisco and other go-to-market partners
like the backup guys you see, Cohesity and Veeam
and guys like Catalogic are here.
If it's easier to integrate
you're going to have more integration partners
and the go-to-market is going to be more facile,
and that's where a lot of the friction is today,
especially in the channel.
>> The last thing I'll end with
is we got a rain of confetti on us
during the main general session today.
The culture of Pure is one that is pervasive.
You feel it when you walk into a Pure event.
The Puritans are very proud of what they've done,
of how they're enabling so many, 4800+ customers globally,
to really transform their businesses.
And that's one of the things
that I think is cool about this event,
is not just the plethora of orange everywhere
but the value and the pride in the value
of what they're delivering to their customers.
>> Yeah, I think you're right.
It is orange everywhere, they're fun.
It's a fun company,
and as I say they're alpha geeks when it comes to storage.
And they love to be first.
They're in your face.
The confetti came down and the big firecracker boom
when they announced that NVMe was going to be available
across the board for zero incremental cost.
Normally you would expect it to be a 15 to 20% premium.
Again, a first that Pure Storage
is laying down the gauntlet.
They're setting the bar and saying hey guys,
we're going to "give" this value away.
You're going to have to respond.
Everybody will respond.
Again, this is great marketing
by Pure because they're >> Shock and awe.
going to do it and everybody's going to follow suit
and they're going to say, "See, we were first.
"Everybody's following, we're the leader.
"Buy from us," very smart.
>> There's that buy.
Another first, this is the first time
I have actually been given an outfit to wear by a vendor.
I'm the symbol of Prince today.
I won't reveal who you are underneath that Superman...
>> Okay.
>> Exterior. Stick around, you won't want to miss
the reveal of the concert tee that Dave is wearing.
>> Dave: Very apropos of course for Bill Graham auditorium.
>> Exactly, we both said it was very hard to choose
which we got a list of to pick from
and it was very hard to choose,
but I'm happy to represent Prince today.
So stick around, Dave and I are going to be here
all day talking with Puritans
from Charlie Giancarlo, David Hatfield.
We've also got partners from Cisco, from Nvidia,
and a whole bunch of great customer stories.
We're going to be right back with our first guest
from the Mercedes-AMG Petronas Motorsport F1 team.
I'm Lisa "Prince" Martin, Dave Vellante.
We'll be here all day, Pure Storage Accelerate.
(bright music)