(mellow music)
>> Hello, welcome back to theCUBE's coverage
here live in San Francisco, California.
I'm John Furrier, your host of theCUBE's CUBE coverage
of AWS Summit 2022 here in San Francisco,
where all the developers are,
it's the Bay Area, it's Silicon Valley
and of course, AWS Summit in New York City
is coming up in December, we'll be there as well.
SF and NYC CUBE coverage, look for us,
of course, Reinforce in Boston
and re:MARS with the whole robotics AI thing,
all coming together.
Lots of coverage, stay with us.
Today we've got a great guest from Decibel VC, Jon Sakoda,
founding partner, entrepreneurial,
venture, is a venture firm, your next act,
welcome to theCUBE, good to see you.
>> Good to see you, man.
I feel like it's been forever
since we've been able to do something in person.
>> Well, I'm glad you're here,
because we run into each other all the time,
we've known each other for over a decade.
>> Jon: It's been at least 10 years.
>> At least 10 years more.
And we don't want to actually go back
(indistinct) the old school web 1.0 days.
But anyway, we're in web 3.0 now,
so we'll get to that in a second.
>> We are, we are.
It's a little bit of a throwback
to the past though in my opinion.
>> It's all the same,
it's all just really computing and software.
We met each other at CUBECon.
You're investing in a lot of tech start up founders, okay?
This next level, next gen entrepreneurs have a new make up.
And it's software, it's hardcore tech.
In some cases, not hardcore tech,
but using software, taking old, something old
and make it better new, faster.
So tell us about Decibel, what's the firm?
I know you're the founder, which is cool.
What's going on?
Explain what you're doing.
>> Yeah, I mean, you remember
I'm a recovering entrepreneur, right?
>> John: Of course.
But you never recovered, you're always an entrepreneur.
>> Always, but we are also always recovering.
So, I started my first company when I was 24,
if you remember before there was Facebook and friends,
there was instant messaging,
people were using that product at work every day,
they were creating a security vulnerability
between their network and the outside world,
so I plugged that hole
and built an instant messaging firewall,
it was my first company,
the company was called Imlogic
and we were acquired by Symantec.
Then spent 12 years investing in
the next generation of software companies,
early investor in open source companies and cloud companies
and spent a really wonderful 12 years at a firm called NEA.
So, I feel like my whole life,
I've been either starting enterprise software companies
or helping founders start enterprise software companies.
And I'll tell you,
there's never been a better time than right now
to start an enterprise software company.
So, the passion for starting a new firm
was really a recognition
that founders today that are starting
an enterprise software company,
they tend to be, as you said,
a more technical founder, right?
Usually it's a software engineer or a builder.
They are building products
that are serving a slightly different market
than what we've traditionally seen
in enterprise software, right?
Traditionally we've seen IT buyers or CIOs
that have agendas and strategies
which purchase software
that is traditionally bought and sold tops down,
but today, I think the most successful
enterprise software companies
are the ones that are built more bottoms up
and have more technical early adopters
and generally speaking,
they're free to use, they're free to try,
they're very commonly community source
or open source companies,
where you have a large
technical community that's supporting them.
So, there's kind of a new normal now I think
in gray enterprise software,
and it starts with great technical founders,
with great products and great (indistinct) emotions
and I think there's no better place to service those people
than in the cloud and in your community.
>> Well, first of all, congratulations
and by the way, you've got a great pedigree
and great background,
you're super smart, I'm an admirer of your work
and your founding,
but let's face it, enterprise is hot,
because digital transformation is all companies.
I mean, consumer is enterprise now.
Everything is what was once a niche...
I won't say niche category,
but you know, not for the faint of heart,
you know, investors.
>> It's so funny that you said that enterprise is hot
because you and I feel that way now,
but remember, like right now,
there's also a giant tech and VC conference in Miami
and it's covering cryptocurrencies and NFTs and Web 3.0.
So, I think beauty is definitely in the eye of the beholder.
Right now, I will tell you--
>> NFTs is one big enterprise,
because you've got to have immutability,
you've got performance issues,
you have IOPS issues.
>> Well, and I think all of us here
that are maybe students of history
and have been involved in open source and the cloud
with say, much of what we're doing
is the predecessors of the Web 3.0 movement
and many of us I think
are contributors to the Web 3.0 movement.
>> The hype is definitely Web 3.0.
Sure.
>> Yeah, no, but now you're taking this
further east of Miami.
I think what is, a question with a case now
and maybe it's more obvious
the more time you spend in this world
is this is the fastest growing part of enterprise software.
And if you include cloud infrastructure
and cloud infrastructure spend,
it is by many measures over 500 billion dollars
and growing 28% to 30% a year.
So, it's a just incredibly fast--
>> Let's get into some of the cultural
and the shifts that are happening,
because, again,
you have the luxury of being an enterprise when it was hard,
it's getting easier and more cooler, I get it,
and more relevant,
but there's also the hype of like Web 3.0 for instance.
But for the CEO snow flake, okay?
Has wrote a book and Dave Vellante
and I were talking about it,
and Frank Slootman has said,
there's no playbooks,
we always ask to see it, what's your playbook?
And he's like, there's no playbook.
Situational awareness always triumphs playbooks.
So, in the enterprise playbook,
oh, hire a direct sales force
and SaaS kind of crushed that,
now SaaS is being redefined, right?
So, what is SaaS?
Is Snow Flake a SaaS or is that a platform?
So, again, new unit economics are emerging.
Whole new situation.
You've got Web 3.0.
So, to me, there's a cultural shift.
The young entrepreneurs, the user experience
and you look at Facebook and say,
ah, you know what, they own all my data
and you know, that cliche, they do a product.
So, as this next gen, the Gen Z and the Millennials
come in and our customers and the founders,
they're looking at things a little bit differently
and the tech's better.
>> Yeah, I mean, I think we can
see a lot of commonalities across all successful startups
and the overall adoption of technology.
And I would tell you, this is all one big giant revolution.
I call it the user driven revolution, right?
It's the rise of the user.
And you might say product like growth
is currently the hottest trend in enterprise software,
it's actually user like growth, right?
They're one and the same.
So, sometimes people think
the product is what is driving the growth.
>> So, you just pull the product through.
>> Exactly, exactly.
So, that I think is really this revolution that you see
and it does extend into things
like cryptocurrencies and Web 3.0
and sort of like the control
that is taken back by the user.
But many would say that the origins of this movement
maybe started with open source
where users were contributors,
contributors were users
and looking back decades
and seeing how it fast forwards to today,
I think that's really the trend that we're all riding,
but it's enabling these end users
and these end users in our world
are developers, data engineers,
cyber security practitioners.
They're really the users
and they're really the beneficiaries
and the most kind of valued people in this economy.
>> I want to come back to the data engineers in a second,
but I wanted to get a comment
and get your reaction too.
I'm a Gen-Xer technically, so not a Boomer,
but I have some Boomer friends
who are a little bit older than me
who they experienced the 60s,
and I've been saying on theCUBE
for probably about eight years now
that we are going to hit a digital hippy revolution.
Meaning a rebellion against...
The 60s was a rebellion against the 50s and the man
and summer of love.
That was a cultural differentiation from the other one,
other group, the predecessors.
So, we're kind of having that digital moment now
where it's like, hey, Boomers, hey, people,
we're not going to do that anymore.
We hate how you organize shit.
>> Right.
But isn't this just technology?
I mean, isn't it like,
there used to be the old adage
like you would never get fired for buying IBM,
but now it's like you obviously
probably would get fired if you bought IBM.
I mean, it's just like the--
>> In the mainframe days,
those renegades were breaking into Stanford
starting the home group club.
So, what I'm trying to get at is that,
do you see that young cultural revolution,
also culturally?
Just this is my identity.
NFTs to me speak volumes about my...
I want to associate with NFTs, not single cyan.
>> Jon: Absolutely.
And I think you're hitting on something
which is like this convergence of societal trends
with technology trends
and how that manifests in our world,
is yes, I think like there is unquestionably
almost a religion around the way
in which a product is built, right?
And we can use open source as one example of that religion.
Some people say, look,
I'll just never try a product in the cloud
if it's not open source.
I think cloud native's another example of that, right?
It either is cloud native or it's not
and I think a lot of people will look at a product
and say, look, you were not designed in the cloud era,
therefore I just won't try you,
and sometimes, like it or not,
it's a religious decision, right?
It's something that people just believe to be true,
almost without necessarily--
>> I mean, the data drives all decision making.
Let me ask you this next question,
as a VC now, you look at...
Well, you've been a VC for many years,
but you also have the founder, entrepreneurial mindset,
but you can empathize with the founders,
hustle is a big part of that first founder check, right?
You've got to convince someone
to part with their money
and the first money in which you do a lot of,
is about believing in the person.
So, faking it till you make it is hard now.
The data's there.
You either have it cloud native,
you either have the adaption or traction.
So, honesty's a big part of that pitch.
You can't fake it till you--
>> Jon: Absolutely.
You know, there used to be this concept
of like the persona of an entrepreneur, right?
And the persona of the entrepreneur
would be somebody who is a great sales person
or somebody who can tell a great story
and I still think that that's important, right?
There still is a human need
for people to believe in narratives and stories.
But having said that, you're right,
the proof is in the pudding, right?
At some point, you click download
and you try the product
and it does what it says it's going to do or it doesn't
or it either stands up to the load test or it doesn't.
So, I feel like in this new economy that we live in,
really it's a shift from
maybe the story tellers
and the creators to the builders, right?
The people that know how to build a great product.
In some ways the people that can build a great product,
stand out from the crowd
and they're the ones that can build
communities around their products
and in some ways can kind of own more of the narrative
because their product--
>> Speaks for.
>> Exactly.
>> And then back to the user lead growth.
>> Exactly.
And it's the religion of I just love your product, right?
And Dug Song is the founder of Duo Security,
he used to say, hey, like,
really, like in today's world
of consumption based software,
like the user is only going to give you
90 seconds to figure out whether or not
you're a company that's easy to do business with, right?
So, you can say and do all the things that you want
about how easy you are to work with,
but if the product isn't easy to install,
if it's not easy to try, if the--
>> It's got to speak to the user.
>> Exactly.
>> But let me ask you a question now
for the people watching who are maybe entrepreneurs,
master class here is in session,
so I have to ask you,
do you prefer an entrepreneur to come in and say,
look at Jon, here's where I'm at?
Okay, first of all, story telling's fine,
whether you're an extrovert or introvert,
have your style, sell the story in a way that's authentic,
but what do you prefer,
to say here's where I'm at,
look, I have an idea, here's my traction I think,
here's my MVP prototype, I need help,
or do you want to just see more stats?
What's the preferred way
that you like to see entrepreneurs come in and--
>> Jon: There's tons of different styles, man.
I think the single most important thing
that every founder should know
is that we don't invest in what things are today,
we invest in what we think something will become, right?
And I think that's why we all get up in the morning
and try to build something different, right?
It's that we see the world a different way,
we want it to be a different way
and we want to work every single moment of the day
to try to make that vision a reality.
So, I think the more that you can show people
where you want to be,
the more likely somebody is going to align with your vision
and want to invest in you
and want to be along for the ride.
So, I wholeheartedly believe
in showing off what you've got today,
because eventually, we all get down to like
where are we and what are we going to do together?
But, no, I--
>> You've got to show the path.
>> I think the single most important thing
for any founder and VC relationship
is that they have the same vision.
If you have the same vision,
you can get through bumps in the road,
you can get through short term spills,
all sorts of things in the middle of the journey can happen,
but it doesn't matter as much
if you share the same long term vision.
>> Don't flake out and be fashionable with the latest trends.
Because it's over before you even get there.
>> Jon: Exactly.
I think many people that do what we do for a living
will say, ultimately,
the future is relatively easy to predict,
but it's the timing that's impossible to predict.
So, you sort of have to balance the...
We know that the world is going in this way
and therefore we're going to
invest a lot of money to try to make this a reality,
but sometimes it happens in six months,
sometimes it takes six years,
sometimes it takes 16 years.
>> What's the hottest thing in enterprise
that you see the biggest wave
that people should pay attention to
that you're looking at right now
with Decibel Partners, Decibel.vc, your site?
What's the big wave?
What's your big wave?
>> There's three big trends that we invest in
and they're the only things we do day in day out.
One is the explosion at open source software.
So, I think many people think about all software
is unquestionably moving to an open source model
in some form or another.
Tons of reasons to debate
whether or not that is going to happen
and on what timeline.
>> John: It's been happening forever.
>> But it is accelerating faster than we've ever seen.
So, I think it's one big massive wave
that we continue to ride.
Second is the rise of data engineering.
I think data engineering is in and of itself now,
that category of software.
It's not just that we store data,
it's not that we move data
and we develop applications on data
and I think data is in and of itself
as big of a market
as any of the other markets that we invest in.
And finally, it's the gift that keeps on giving.
I've spent my entire career in it.
We still feel that security is
a market that is under-invested,
it continues to be the place
where people need to do to invest
and spend more money,
and those are the three major trends that we ride.
>> And security, you think
we all need a do-over, right?
I mean, do we need a do-over in security
or what's the core problem?
>> I keep using this word, under-invested
because I think it's the right way
to think about the problem.
I think people generally speaking
look at cyber security as an add-on.
But if you think about it,
the whole economy is moving online
and so in some ways,
like security is core to protecting the digital economy.
So, it shouldn't be an after-thought, right?
It should be core to what everyone is doing
and that's why I think
relative to the trillions of dollars that are at stake,
I believe the market size for cyber security
is around 150 billion dollars.
And it still is a fraction of what we're protecting.
>> And national security is booming now,
so you get the convergence of national security,
geo-politics, internet, digital.
>> Jon: That's right.
Arguably, again, it's the area of the world
that people should be spending more time and more money,
given what's at stake.
>> I love your thesis.
I've got to say, I love your firm, love what you're doing.
We're big supporters of your mission.
Congratulations on your entrepreneurial venture
and we'll be talking.
I'll maybe see you at CUBECon--
>> Absolutely.
>> Certainly EU, maybe even North America,
it's in Detroit this year.
>> John: Huge fan of what you guys are doing here.
>> Thanks, appreciate it.
>> Jon: And thank you so much for having me on the show.
>> Decibel VC here on theCUBE.
Check him out in founder for founders here on theCUBE.
More coverage from San Francisco, California
after this short break, stay with us.
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