(upbeat music)
>> Announcer: Live from San Francisco,
celebrating 10 years of high-tech coverage, it's theCUBE,
covering VMworld 2019.
Brought to you by VMware and its ecosystem partners.
>> Welcome back to theCUBE.
Two sets, wall-to-wall coverage, our 10th year.
We actually call this one the Valley set,
over on the other side, it's in the middle of a meadow,
and this was in the valley.
I'm Stu Miniman.
My cohost for this segment is, of course, John Furrier,
the founder of SiliconANGLE.
And joining us, the quintessential Valley guest
that we have, Jerry Chen.
Long time participant in the program,
climbing up the leaderboard here
of theCUBE Times at VMworld.
Jerry, thank you so much for joining us.
>> Stu, John, thanks for having me back.
>> All right, so we knew you back when you worked for VMware.
>> Jerry: Right.
>> You're now a partner at Greylock.
We watched some of your amazing startups,
we've had many of them on our program.
Just a little bit going on in your world this day,
maybe we'll start there.
>> Sure, it amazes me, both being at VMworld
10 years since you guys started covering.
For me, I joined VMware back in 2003.
So I was at the first Vmworld,
through every single one of them,
and seeing this ecosystem reinvent itself,
and juxtapose that with every other conference at Moscone.
So Dreamforce, Oracle OpenWorld, VMworld.
And I would say five years ago,
no one would have thought Dreamforce itself,
or Salesforce as an ecosystem big enough for investors.
But yes, now they can invest in startups.
All they do is sell to the Salesforce ecosystem.
You can always invest in a startup.
All they sell to is the VMware ecosystem.
And for sure, when, you and I,
three of us go to Amazon or an event,
that ecosystem just continues
to grow exponentially year over year.
>> And this some of the highlights of Datadog,
we were talking before we came on camera.
They always had a big booth,
they bet on the AWS ecosystem,
not a lot of Datadog here,
but monitoring turns into observability,
a key component, which basically was a white space.
I mean, monitoring was boring.
A little sector, but because of the nature
of the data security auditing,
this has become kind of a killer category.
>> I think last week you saw SignalFX get acquired by Splunk,
which is another huge enterprise company,
and Datadog filed their S-1.
No one thought monitoring would be a big enough market
to support multiple billion plus companies,
and what we've learned is making a bet
on just cloud-native companies like Datadog did,
purely in the Amazon Ecosystem,
was a great bet because they've grown super fast,
and that market turned out to be very big.
In addition, it could be Splunk, and they could bet on
logging for mostly on-premise companies.
That turned out to be a large market.
So I think five, 10 years ago,
no one thought that these markets
would be so big and so gigantic.
The cloud itself, you can have a multi-billion dollar
company like Datadog purely on a cloud-native application
and cloud-native companies, if you will.
>> You know, it's interesting, you're a VC
and the enterprise specialist at Greylock.
Consumer used to be all the rage in venture.
"Oh, we're going to consumer against Facebook,"
Facebook breaks democracy, all kinds of problems.
Being regulated.
But enterprise became really hot with the cloud,
and then you have an interesting dynamic.
Now a thousand flowers are blooming on the startup side,
so yes, there's a lot of action in startups,
but the buyers of startups and the IPO markets
is where the liquidity happens, which you care about, right?
So now you have liquidity options for IPO
for fast-growing flit scalers as you guys call it,
and then the M and A market are buying the companies.
So I got to ask you, with seeing Splunk as a great example,
where they own the log market, log files,
bring SignalFX in, former VMware guys and Facebook guys,
comes in, they add some servability piece to it.
Splunk's got more power now because of the acquisition.
It's not just token acquisition.
This is the market, product market slash M and A market.
What's your thoughts on that?
Because that's a key exit opportunity,
and the numbers are pretty sizable when you think about it.
>> I think just going back to the opportunity,
the market's so big that you have multiple
multi-billion dollar companies,
so like Splunk's a huge company, great company.
We're investors in a company called Sumo Logic.
That's going to also be a successful company,
and also a big--
>> John: And filed for IPO.
>> And a big company that's OZA, Amazon, and Vmworld.
So I think what you have here
is each of these markets are monitoring,
APM, the log, infrastructure,
are turning out to be multi multi-billion,
and larger than we anticipated.
So I think before, to your analogy in the consumer,
we always knew consumer markets had huge TAMs.
Like how many billion in people are on Facebook?
How many billion people are on Twitter?
What we're learning now is the market and the TAM
for these enterprise software companies,
be it SAAS, be it LOG, be it Metrics, be it security,
those TAMs are actually bigger
than we thought beforehand as well.
>> And the driver of that is what?
Cloud, transformation, just replatforming, modernization?
The businesses are businesses still.
>> I think the move to cloud is accelerate,
I think your last line,
"businesses are businesses," is what's key.
Like every business now is being touched by software.
They all got to go cloud so I'm an investor
in a company called Blend that does mortgage software.
So the entire financial services industry,
from mortgages to car loans and consumer lending,
that's all going digital.
That's all going online.
Jobs that were like mortgage brokers
are going to be an app on your phone now.
So finance, retail, healthcare, construction,
so all these markets now are going to the cloud,
going digital, so these TAMs are expanding exponentially.
>> Yeah, Jerry, want to get your take on the ecosystem.
You know, we look at VMware, they built a big ecosystem,
the end user computing space, you know.
You've coined the term Virtual Desktop Infrastructure,
from that environment there was an ecosystem around there.
I see VMware at a lot of shows,
and they have a good presence there,
and there's some overlap between the public cloud space.
Like when I go to this show,
and I walk through the expo hall, oh my gosh.
Data protection is everywhere, and all of those companies
are at a all of the cloud environment,
but do you see a transition from, you know,
where VMware is in kind of the cloud-native space?
Is there a lot of overlap,
or what's your thinking on those kind of dynamics?
>> I think all above.
I think VMware at Vwworld,
and like all these tech companies are constantly
reinventing themselves and expanding.
So you have, as a VC,
say it's this company I'm looking at,
when it's two individuals, and a dog, and PowerPoint.
Is it a feature, is it a product, or is it a company?
It's a feature, it's okay.
You know, it's probably not worth the investment,
but it's worthwhile.
It'll get acquired for something.
Is it a product?
Some companies are just one killer product, right?
And you can ride that product for the arc of the company.
But then some startups turn out be companies,
multi-product companies.
And there always have one or two great products,
and then you start adding new things
as the market evolves, and VMware has done that.
And so, as a result of adding server virtualization,
desktop virtualization, Cloud Foundry which I helped build,
out in the Kubernetes stuff.
So they're adding multiple products to their company.
I think the great companies can do that.
Look at Amazon.
They keep launching 10 new products every single month.
Microsoft has done a great job reinventing themselves.
So I think the great companies can reinvent,
but not transform, they just add to what they have,
and just to be a multi-product family.
>> Stu: All right, so you mentioned Cloud Foundry.
>> Yeah.
>> Pivotal, of course, is now back in the mothership
where it started there.
When Cloud Foundry first started it was,
"Well, we're not going to take the hypervisor
"and put it all of these places."
We needed a slightly different footprint.
Well, five years later,
we're talking about Kubernetes
is going to be baked into Vsphere,
and Vsphere is going to be a main piece
of VMware's cloud-native strategy.
Has the market changed or some of those technology pieces,
you know, still a challenge?
What's your take there?
>> You know, it's a great question because I think
what we're seeing is there's never ever
in technology as you guys know, on platforms,
it's a zero-sum game.
It's never always going to all mainframe,
all client server, all VMs, all microservers,
all Serverless, right?
And I think we're seeing is
it's also never going to be all Amazon,
it's never going to be all Google,
it's never going to be all Azure, right?
I think we talked about early days,
it's not a winner take all.
It may be, you know, what one-third, two-thirds,
or something, 25-40% market share,
but it's not going to be all or nothing.
And so we're seeing companies now have architectures
on multiple clouds, multiple technologies,
and so just like 10 years ago,
you had a mainframe team, you had a Windows team,
you had a Solaris team.
Remember Sun and Spark?
And a Linux team.
Now you have a Google team, and Azure team,
an Amazon team, and an on-prem team.
And so you just had these different stacks evolve,
and I think what's interesting to see is like,
we've kind of had this swing of momentum
around Docker, Containers, Kubernetes, Serverless,
but at the same time you see a bunch of folks realize,
okay, what's happening is I'm choosing
how much I want to consume.
Like an API, a container, or a whole VM, right?
And people realizing, yes,
maybe consuming the APIs is our right level of consumption,
but quite frankly, Stu, John,
buying whole VMs also what I want.
So you see a bunch of companies say,
I'm just going to build better monolithic applications
around VMware, I'm going to build better microservices
around Docker and Kubernetes,
and then we'll use Serverless
where I think I need to use Serverless.
>> Yeah, that's a good point.
One of the things we hear from customers we talk to,
and there's two types of enterprise customers,
at least in the enterprise infrastructure side,
classic CIOs and then CISOs.
Two different spectrums.
CIOs, old, traditional, multi-vendor means a good thing,
no lock in, I know how to deal with that world.
CISOs, they want to build their own stacks,
manage their own technology,
then push APIs out to the suppliers,
and rechange the supplier relationship because security
is so important they're forced to the cutting edge.
So I look at that a kind of canary in the coal mine,
and want to get your thought on that,
because we're seeing a trend where enterprises
are building software.
They're saying, hey, you know,
I want a stack internally that we're going to do
for a variety of different reasons, security or whatever,
and that doesn't really blend well
for the multi-cloud team approach,
because not everyone can have three killer teams
building stacks, so you're seeing some people saying,
you know, I'm going to pick a cloud here and go all in
on certain things, build the stack,
and then have a backup cloud there.
And then some CIOs say, hey, you know what?
I want all the cloud guys in there
negotiating their best price maybe, or whatever.
>> I think it's great nuance you pointed out.
Even just like we had a Windows team and a Linux team,
you still had a single database team that ran across both,
or storage teams are ran across both.
So I think the nuance here is certain parts of the stack
should be Azure, Amazon, VMware.
Certain parts of the stack should be,
I think that the ultimate expression
is just an API with service errors.
So one of the companies you guys are familiar with,
Roxette, it's a search and Serverless analytics company.
It's basically an API in the cloud,
multi-cloud, to do search and analytics.
And just like you had a database team
that's independent across all these stacks,
for certain parts of the architecture,
you're going to want something like Roxette,
that's going to be independent of the architecture stacks.
And so it's not all isolated, it's not siloed,
it's not all horizontal, depending on the part of the stack,
you're going to either want a horizontal cross-cloud solution,
or a team that's going to go deep on one.
>> So it's really a contextual decision based on
what the environment looks like, or business.
>> And there's certain areas of technology
that we know from history that lends themself
to either full stacks versus horizontals.
Just like I said, there was a storage team
and a database team, right?
That's Oracle, or something that ran across Windows
and Linux and Sun, you're going to see someone like
Roxette become this search and Serverless analytics team
across multiple cloud stacks.
>> This is why the investment is such a great opportunity
for the enterprise VCs right now because,
I mean, there's so many dimensions of opportunities
for companies to grow and become pretty large,
and the markets are shifting so the TAM is pretty big.
Michael Dell was just on the other side,
I interviewed him.
He says, you know,
he was getting kind of in Dave's grill saying,
"Well, the TAM for enterprise is bigger than cloud TAM."
I go, "Well that TAM is going to be replatformized,
so like that's going away and moving, shifting,
so the numbers are big but they're shifting
so tons of opportunities.
>> It depends if you're a big company like Dell
versus a small startup.
Oftentimes, this true that the TAM for enterprise
is still much larger than cloud, but your point is
what's shifting were the dollars growing fast.
>> The TAM for horses was huge at one point, and then,
you know, cars came along, right?
So you know. >> Every startup,
what you want to do, you want to attach to a growing budget.
You don't want to attach to a flat to shrinking budget.
And so right now, if you're a founder, and say,
"Okay, where are the budget dollars flowing to?"
Everyone's got a kind of a cloud strategy,
just like they had a VMware virtualization strategy,
so if I'm like a startup G, metrics, or data analytics,
I'm going to try to attach to where the dollars are flowing.
That's a cloud strategy,
that's an AI application strategy, security strategy.
>> So let me ask you one question.
So if I'm going to start up, this is a hypothetical startup,
startups got an opportunity.
It's a SaaS-based startup, they say, "You know what?
"This is a feature in the market
"that's part of a bigger system,
"but I'm going to innovate on that."
I think that with the markets shifting,
that could evolve into a large TAM
to your point about Datadog.
What's the strategy, from an investment standpoint,
that you would take?
Would you say go all in on the single product?
Do you want to have one or two features?
What's the makeup of that approach,
because you want to have some maybe defensibility,
is it go all in on the one thing
and hope that you return into like a Salesforce,
then you bolt stuff on, or do you go in
and try to do a little platform play underneath?
>> It depends where you are in the startup world.
We're in lifecycle.
Look, startups succeed because they do
one thing better, right?
And so focus, focus, focus.
And you have to have something
that's like 10 times faster, 10 times better,
10 times cheaper, or something different.
Something the world hasn't seen before.
But if you do that one thing well,
either A, you're taking budget dollars from incumbents,
or B, you're something net new, the world hasn't seen,
people will come to you when they see utility.
As an investor I like to see that focus,
I like to see, you know, some founders you get say,
hey, Stu, think bigger.
Some founders like John think smaller.
Like what's your wedge?
What's that initial entry point
to the customer you're going to hit?
Because once you land that, you get the right
to do the next product, the next feature.
>> That's the land, adopt, expand, like Xoom did.
Or they picked video, >> Correct, voice, et cetera.
>> I mean who the hell thought that
was going to be a big market?
It's a legacy market but they innovated with the cloud.
>> Absolutely.
I have all these sayings that I try to say like,
"You don't get to play the late innings,
"if you don't make it out the early innings," right?
You know, and so if you want and have this strategy
for this large platform, that's great,
and every VC wants to see a path there.
But they want to see execute
from we're going to land, and we're expand.
Now, startups fail because either where they land,
they picked incorrectly.
Like you decided to storm the wrong beach, right?
Or it's either to small, or it's too big.
The initial landing spot is too big,
and they can't hold that ground.
And so part of the art of navigating
from Point A to Point B, or where I say,
Act one, Act two, Act three of a lifecycle
is make sure that you land correctly,
earn your keep, show a lot of value,
win that first battle, if you will, Act one,
and then they move to Act two, Act three,
and you can see a company like VMware clearly
on their second, third act, right?
And they've done a nice job of owning one product category,
server virtualization, desktop virtualization,
now expanding to other adjacent categories,
buying companies like Carbon Black, right?
In terms of security.
So it doesn't happen overnight.
I mean, VMware started in 1998.
I was there when there was about 200 employees.
People forget Amazon's been, gosh
27, 1998, when Bezos started selling books.
Now they're selling books, movies, food,
groceries, video, right?
>> When did you first use AWS?
Was it when the EC2 launched?
I mean, everyone kicked the tires on that puppy.
>> We all kicked the tires.
I was at VMware as a Product Manager,
I think it was '06 when they launched, right?
And we all kind of kicked the tires on it.
And it was a classic innoverse dilemna.
We saw this thing that you thought was small
and a very narrow surface area.
Amazon started with an EC2,
>> Two building blocks, storage and EC2.
>> S-3, right, that's it.
And then they said, "Okay, we're going to give a focus,
focus on basic compute and basic object storage,"
and people were like, "What can you do with S-3?
"Nothing," right?
It's not a Sand, it's an availability.
It's going to fail all the time,
but people just started innovating
and working their way through it.
>> All right, so Jerry, when you look
at the overall marketscape out there today,
it seems like you still feel pretty confident
that it's a good time for startups.
Would you say that's true?
>> Absolutely.
>> All right, I want to get your final word here.
10 years in theCUBE at Vmworld,
you know, you've known John for a long time.
Did you think we'd make it?
Any big memories as to what you've seen
as we've changed over the years.
>> I've plenty, let's go back to,
>> John: Okay, now you can embarrass us.
>> 10 year anniversary of VMworld.
For your first Vmworld 10 years ago,
I was like a Product Manager, and John Furrier,
I think I met at a Press dinner, and he's like,
"Hey, Chen," walking by, "come here, sit down,"
and they turn the camera on,
and we had no idea what was going on,
and he just started asking a bunch of random questions.
I'm like, sure, I haven't cleared this with marketing
or anyone else, but why not?
>> John: Hijack interview, we call that.
>> Hijack interview, and then it's been amazing
to watch the two of you, Dave, John, everybody,
grow SiliconANGLE and theCUBE in particular,
and to this, the immediate franchise,
in terms of both having a presence at all these shows,
like Amazon, Oracle World, DreamForce, Vmworld, etc.
But also the content you guys have, right?
So now you have 10 years of deep content,
and embarrassingly enough, 10 years, I guess,
of videos of yours truly, which is always painful to watch,
like either what I was saying,
or you know, what my hair looked like back then.
>> Stu: Jerry, you still have hair though, so.
(laughing)
>> Well, the beautiful thing is that we can look
at the reputation trajectory of what people say
and what actually happens.
You always had good picks,
loved the post you did on MOATs.
That turned out to be very timeless content,
and yeah, sometimes you miss it, we sometimes cringe.
>> We miss a bunch.
>> I remember starting one time with no headset on.
Lot of great memories, Jerry.
Great to have you in the community.
Thanks for all your contribution.
>> I look forward to the next 10 years of theCUBE,
so I got to be here for the 20th anniversary,
and now if I walk away, come back on right away,
do I get another notch on my CUBE attending list
so I can go up and catch Hared in the best?
>> If you come on the other set,
that counts as another interview.
>> Perfect, so I got to catch up
with Steve and the rest of the guys.
>> Steve just lost it to Eric Herzog just a minute ago.
We had a ceremony.
It was like a walk through the supermarket,
the doors thing, and the confetti came down.
11th time so you got to get to 11 now.
So 12 is the high water mark.
>> Done, we need t-shirts.
(laughing)
>> Well Jerry, thanks so much for joining us again.
For John Furrier, I'm Stu Miniman,
and you can go to theCUBE.net,
if you search for Jerry Chen,
there's over 16 interviews on there.
I know I've gone back and watched some of them.
Some great discussions we've had over the years.
Thanks so much, and stay tuned for lots more coverage
here at Vmworld 2019.
Thanks for watching theCUBE.
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