Live from TC Sessions: Enterprise 2019


>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS, THE PROGRAM WILL BEGIN IN 10 MINUTES.>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS. THE PROGRAM WILL BEGIN IN FIVE MINUTES.>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS. THE PROGRAM IS ABOUT TO BEGIN.>>LADIES AND GENTLEMEN, PLEASE WELCOME TECHCRUNCH EDITOR-IN- CHIEF MATTHEW PANZARINO. >>HELLO EVERYONE. IT’S AMAZING TO SEE YOU HERE. IT’S ACTUALLY QUITE ENCOURAGING TO SEE SO MANY IN YOUR SEATS THIS EARLY. IT’S A TOSSUP. YOU NEVER KNOW IF PEOPLE WILL GET HERE ON TIME BUT WE’RE GLAD YOU ENJOYED THE PANCAKES NEXT-DOOR IF YOU HAD THOSE. WE PLAN THESE EVENTS AROUND SINGLE TOPICS FOR A VARIETY OF REASONS. WE’VE DONE ONES ON ROBOTICS AND ONCE ON VARIOUS OTHER TOPICS, BUT IN GENERAL WHAT WE LIKE TO DO IS MAKE SURE PEOPLE IN THE ROOM THAT CAN LEARN FROM ONE ANOTHER. WE WILL PRESENT INFORMATION ON STAGE AND TALK TO PLAYERS IN THE INDUSTRY THAT WILL HOPEFULLY HAVE INTERESTING THINGS TO SAY BROUGHT UP BY THE EXCELLENT MODERATORS. AND IN BETWEEN YOU WILL HAVE TIME TO TALK TO ONE ANOTHER. THE AUDIENCE IS FULL AND WE KNOW WHO COMES. ENTREPRENEURS, INVESTORS, PEOPLE THAT WORK IN THE ENTERPRISE AND IN YOUR CASE PEOPLE INTERESTED IN ANALYZING THE INDUSTRY. IT’S A BROAD MIX OF PEOPLE AND OF COURSE ALWAYS A CONTINGENT OF STUDENTS. RECRUITERS BE ON THE LOOKOUT. IT’S ALWAYS ENCOURAGING TO SEE THAT INTERPLAY AND THAT’S WHAT WE VIEW OUR JOB TO BE, TO BRING YOU TOGETHER AND INTERACT AND TALK AND PROVIDE TOPICS FOR DISCUSSION FOR YOU FROM THE STAGE. WE HAVE A GREAT SHOW AHEAD OF US. SUSAN PRESCOTT WHO RUNS ENTERPRISE THAT APPLE WILL BE HERE AND AARON LEVIE FROM BOX WILL BE HERE. HE HASN’T BEEN IN THE NEWS SO WON’T HAVE MUCH TO TALK ABOUT. SCOTT FARQUHAR FROM ATLASSIAN AND BILL McDERMOTT , CEO OF S.A.P. A PACKED SCHEDULE AND WE WILL TALK ABOUT SECURITY AND A.I. AND QUANTUM ENTERPRISE AND OF COURSE A VARIETY OF OTHER TOPICS RELATED TO THE INDUSTRY. TAKE YOU ALL FOR BEING HERE. I WILL TURN IT OVER TO OUR FIRST SPEAKER. >>LADIES AND GENTLEMEN PLEASE WELCOME TO THE STAGE TECHCRUNCH SILICON VALLEY ENTER AND ENTERPRISE Mc CONNIE. >>HELLO EVERYONE! GOOD MORNING! SO MUCH FOR BRAVING THE TRAFFIC TODAY BY FOOT, UBER, HOWEVER YOU DID IT. THANK YOU FOR COMING HERE. AS MATTHEW SAID WE HAVE A GREAT SHOW FOR YOU. I WILL HELP Mc TODAY AND LET YOU KNOW ABOUT A FEW THINGS HAPPENING INCLUDING BREAKOUT SESSIONS AND COMMUNITY SESSIONS THAT WILL BE TERRIFIC. I WILL LET YOU KNOW AS THEY APPROACH. SO YOU KNOW THEY ARE HAPPENING ON THE SECOND FLOOR OF THE FORUM WHICH IS APPARENTLY RIGHT ABOVE WHERE YOU PICKED UP YOUR REGISTRATION BADGES. WE ALSO WANT TO LET YOU KNOW IF YOU STICK AROUND FOR THE RECEPTION AT THE END OF THE SHOW, YOU CAN MEET WITH THE TEAM, THE SPEAKERS AND ALSO WE WILL HAVE ICE COLD BEER FOR YOU. IF YOU WANT TO FOLLOW UP ON THE CONVERSATION ON TWITTER THE HASHTAG IS TC ENTERPRISE AND WE WOULD LOVE FOR YOU TO FOLLOW ALONG AND CONTRIBUTE. IT’S NICE WHEN YOU RECORD SOMETHING AT OUR EVENT AND WE LOVE FOR YOU TO TWEET AWAY IF THAT’S OF INTEREST. ALSO AND LAST BEFORE WE JUMP INTO TODAY’S CONVERSATION WE WANT TO LET YOU KNOW THAT AS PART OF YOUR BEING A GUEST WHICH WE APPRECIATE, YOU WILL FIND A DISCOUNT CODE IN YOUR INBOX AT THE END OF THE DAY FOR THE NEXT REALLY BIG EVENT HAPPENING A BLOCK FROM HERE ON OCTOBER 2 THROUGH THE FOURTH. WE WOULD LOVE TO SEE WHAT THAT EVENT AS WELL. IF YOU WILL HELP ME JOINING OUR FIRST PANEL IS. I’M ABOUT TO INTRODUCE THREE TOP-NOTCH VCs WHO THINK ABOUT ENTERPRISE STARTUPS AND WE WILL TALK ABOUT HOW TO SEPARATE THAT, WE HAVE MAHA IBRAHIM FROM CANAAN PARTNERS, REBECCA LYNN OF CANVAS VENTURES AND JASON GREENE FROM EMERGENCE CAPITAL. >>>>THANK YOU SO MUCH FOR COMING. >>IT’S ALWAYS NICE’S. >>JASON WE WILL START WITH YOU IF THAT’S OKAY. WE HAVE A LOT OF PEOPLE IN THE AUDIENCE, ENTERPRISE STARTUPS, HOW MANY DO YOU HEAR FROM EVERY YEAR AND HOW MANY DO YOU MEET WITH AND HOW MANY DO YOU ACTUALLY RUN? >>EMERGENCE CAPITAL IS 100% FOCUSED ON ENTERPRISE. WE’VE BEEN DOING IT 15 YEARS. WE’RE IN THE GOLDEN AGE OF ENTERPRISE. WHEN WE STARTED WE MAYBE SAW A FEW HUNDRED STARTUPS A YEAR AND FUNDED ABOUT FIVE OR SIX. TODAY WE SEE OVER 1000 A YEAR. WE PROBABLY DO DUE DILIGENCE ON 25 AND SAME DEAL FLOW IN TERMS OF THE NUMBER OF DEALS WE ACTUALLY END UP INVESTING IN BECAUSE OUR FOCUS IS EARLY- STAGE AND BEING AN IMPORTANT PARTNER TO COMPANIES AND YOU CAN ONLY INVEST IN SO MANY AND DO IT WELL. >>TONS OF STARTUPS TO CHOOSE FROM. REBECCA, YOU FOCUS PART OF YOUR EFFORTS ON ENTERPRISE, WHAT ARE YOU LOOKING FOR IN A TEAM? WHAT MAKES YOU MORE COMFORTABLE WITH A FOUNDER? IS THAT CERTAIN CERTIFICATIONS OR INDUSTRY EXPERTISE? >>THIS IS HARD. IT’S LIKE WHAT YOU LOOK FOR IN A HUSBAND? YOU ARE THERE FOR 10 YEARS. YOU ARE WORKING FOR THIS PERSON AND WITH THIS PERSON FOR 10 YEARS AND OFTENTIMES, THROUGH GOOD TIMES AND BAD. YOU ARE LOOKING FOR SOMEBODY WHO A OF COURSE HAS A BIG MARKET, SO A REALLY BIG COMPANY THAT CAN EVOLVE AND GROW INTO, AND THEN YOU ARE LOOKING FOR UNIQUE INSIGHT ESPECIALLY IN ENTERPRISE . MAYBE THEY WORKED SOMEWHERE AND HAD A PROBLEM THAT THEY WERE DEALING WITH THERE THAT THEY FOUND A GREAT WAY TO SOLVE , OR SOME UNIQUE INSIGHT. ESPECIALLY ON ENTERPRISE THAT IS CRITICAL TO UNDERSTAND MARKET DYNAMICS AND MARKET FORCES. AND I DON’T KNOW HOW TO CALL IT ANYTHING ELSE BUT GRIT. I ALWAYS TALK TO THE FOUNDERS AND I LIKE THEIR STORY. I WANT TO HEAR ABOUT THEM. I WANT TO HEAR ABOUT HOW THEY GOT THERE. SOMETHING ABOUT THEIR PERSONAL LIFE OR PERSONAL STORY THAT SHOWS THE GRIT THAT THEY HAVE. YOU HAVE TO HAVE IT. VERY FEW COMPANIES ARE UP AND TO THE RIGHT THEIR ENTIRE LIVES. IT’S THE TIMES THAT THINGS DON’T GO RIGHT THAT YOU HAVE TO PICK YOURSELF UP AND KEEP GOING AND KEEP FIGHTING. THAT’S WHAT WE LOOK FOR. >>SO MANY FOUNDERS COMING OUT OF SO MANY INDUSTRIES, FINTECH, CYBERSECURITY, REAL ESTATE, HOW DO YOU THINK ABOUT THESE DIFFERENT VERTICALS? ARE YOU SHOPPING BY VERTICAL OR ARE YOU MORE INTERESTED IN FOUNDERS WHO WALKED THROUGH THE DOOR? >>I SAY IT’S A MIX OF BOTH. TO YOUR POINT, THE GOLDEN AGE OF ENTERPRISE IS COMPLETELY UPON US, BUT IT IS TRANSFORMED. YEARS AGO WHEN WE STARTED ENTERPRISE INVESTING, DECADES AGO, WE LOOK MORE HORIZONTAL AT APPS AND THAT COULD BE CRM OR MARKETING AUTOMATION ETC. . OVER THE LAST I WOULD SAY 10 YEARS OR SO WE HAVE AT CANAAN REALLY FOCUSED ON FRANCHISE AREAS WITHIN ENTERPRISE. THAT COULD BE FINTECH OR INSURANCE TECH OR PROBABLY FIVE INVESTMENTS IN THE LAST TWO YEARS, COULD BE REAL ESTATE TECH WHERE WE HAVE EQUIVALENT ACTIVITY. IT’S MORPHING MORE AND MORE FROM TRADITIONAL INFRASTRUCTURE SOFTWARE AND HORIZONTAL APPS TO THINGS THAT ARE MUCH MORE VERTICAL LIES IN SPECIALIZED. >>JASON, WHAT ARE YOU TIRED OF SEEING? WHAT ARE YOU SEEING TOO MUCH OF? >>THERE’S AN INCREASE — WELL, THE HORIZONTAL APPS TAKE A LOT BUT TAKE SMALLER SLICES OF THE PROBLEM AND TRYING TO PITCH A.I. AS BASICALLY A NEXT-GENERATION SOLUTION FOR THAT. TO BE HONEST, IT FEELS MORE LIKE A FEATURE THAN A REASON TO START A COMPANY. WE LIKE THESE INDUSTRY CLOUD STRATEGIES WHERE WE ARE TRYING TO BUILD A COMPANY THAT CAN OWN 50% PLUS MARKET SHARE AND BE A LEADER IN ITS CATEGORY. IT’S TOUGH TO PICK UP LITTLE SLICES AND BUILD A SIGNIFICANT COMPANY. OUR BUSINESS IS ALL ABOUT BUILDING ICONIC COMPANIES. 20 BILLION-DOLLAR BUSINESSES, SO IT’S RARE YOU CAN DO THAT ON A VERY THIN SLICE. IT’S GREAT TO BE FOCUSED TO START, BUT YOU HAVE TO HAVE A VISION HOW YOU CAN BUILD A SIGNIFICANT BUSINESS. >>SO YOU’RE LOOKING FOR BIG MARKETS AND ALSO AS THEY ARE MATURING YOU ARE LOOKING FOR DIFFERENT METRICS. REBECCA, A GENERAL QUESTION, WHAT SORT OF METRICS ARE MOST IMPORTANT TO YOU AND HOW ARE THEY CHANGING WITH SUBSEQUENT FUNDING ROUNDS? >>WHAT METRICS ARE IMPORTANT AND HOW THEY CHANGE, I THINK IN ENTERPRISE AND PROBABLY ONE OF THE MOST IMPORTANT METRICS IS HOW MUCH WOULD YOUR CUSTOMER PAY FOR THIS AND WHAT IS THE SALES FORCE YOU HAVE TO HAVE BEHIND IT? WE ALL HOPE FOR LIGHTNING IN A BOTTLE WHERE YOU BUILD IT AND IT’S SELF-SERVING YOU PUT IT ON YOUR WEBSITE AND EVERYONE COMES AND THERE’S NO CELL SOURCE AND YOU CAN SELL IT FOR $3000 ANNUALLY. THOSE THINGS DON’T EXIST VERY OFTEN. SO WHAT YOU LOOK FOR IN METRICS ARE METRICS THAT MAKE SENSE FOR YOUR BUSINESS MODEL. IF YOU HAVE A FULLY STAFFED ENTERPRISE SALES FORCE THAT YOU NEED TO EXECUTE AGAINST YOUR PLAN, YOU NEED AN ACV BETWEEN $50,000 AND $100,000 TO SUPPORT THAT. AND YOU NEED TO BELIEVE YOU CAN GET THERE. IN ADDITION TO THAT WE LOOK HEAVILY ESPECIALLY LATER STAGE AT UPSELL’S. ARE YOU UP SELLING OR CROSS-SELLING ARE GROWING THAT OR DO YOU HAVE NEGATIVE AND HOW DO YOU GET THERE? WE PAY ATTENTION TO THAT BECAUSE IT SHOWS US WITH JUST THE NUMBERS THAT YOU BUILT SOMETHING THAT THE CUSTOMERS VALUE AND THEY WILL PAY A LOT FOR. ALSO YOU CAN SELL INTO IT AND HIRE SALESPEOPLE AND CONTINUE TO SCALE YOUR SALES ORGANIZATION TO GO AFTER IT. >>MAHA, YOU ARE INVESTING IN CONSUMER AND ENTERPRISE SO HOW DO THOSE METRICS CHANGE? YOU CAN ALSO UPSELL A CONSUMER CUSTOMER SO WHAT ARE YOU LOOKING FOR? >>THERE’S A LOT OF OVERLAP WITH RESPECT TO METRICS. I WILL TELL YOU AS AN EARLY STAGE INVESTOR I TEND NOT TO BE SO FOCUSED ON METRICS AS I’M SURE THESE GUYS WOULD SAY. FRANKLY AT THE EARLY STAGE, IN MY INDUSTRY I FEEL LIKE PEOPLE ARE FOCUSING ALMOST TOO MUCH ON METRICS AND NOT AS MUCH TO REBECCA’S POINT ON TAM. THIS GOES TO JASON’S POINT, WE INVEST AND DON’T NECESSARILY HAVE THE INITIAL TRACTION EARLY . WE ARE BETTING ON HUGE MARKETS. BUT, ONCE THE COMPANIES EVOLVE, IT’S SO MUCH OF A CORRELATION BETWEEN CONSUMER AND ENTERPRISE IN THAT WE WANT CUSTOMERS THAT LOVE THE PRODUCT. WE WANT CUSTOMERS THAT COME BACK AND COME BACK AND COME BACK TO US WITHOUT US HAVING TO PAY FOR THEM TO COME BACK. SO THE EQUIVALENT IN A CONSUMER COMPANY WOULD BE ME HAVING TO SPEND ADVERTISING DOLLARS TO ACQUIRE THAT CUSTOMER AGAIN AS OPPOSED TO THE CUSTOMER JUST COMING BACK BECAUSE HE OR SHE LOVES WHAT I AM DOING. THE SAME GOES FOR THE ENTERPRISE. I HAVE CUSTOMERS THAT COME TO US BECAUSE THEY LOVE THE SERVICE, THEY LOVE THE PRODUCT, AND THE KEEP BUYING MORE AND MORE AND MORE. THERE IS A LOT OF SIMILARITIES. >>I HAVE TO SAY, I THINK WE ALL RELY ON SOME ENTERPRISE PRODUCTS THAT WE DON’T LOVE, BUT FOR SOME REASON WILL NOT GO AWAY. I WONDER WHEN IT COMES TO ENTERPRISE SOFTWARE, IS SALESMANSHIP AS IMPORTANT AS SELLING THE PRODUCT? IT SOMETIMES SEEMS LIKE IT IS? JASON, WHAT DO YOU THINK? >>NOWADAYS THE BEAUTY OF ENTERPRISES THE PRODUCT CAN SELL ITSELF OR ALMOST SELL ITSELF. GREAT PRODUCTS ARE EMERGING TODAY AND ALMOST JUST BEING BOUGHT OFF AND ZOOM IS A GOOD EXAMPLE WHERE IT SPREADS VIRALLY. YOU CAN BUILD AN ENTERPRISE TEAM ON TOP BUT IT’S GOT A BEAUTIFUL NUGGET OF SELF- SERVICE PRODUCT. THE ENTERPRISE, WE STILL FIND YOU NEED TO SUPPORT AND HAVE A GO-TO-MARKET CAPABILITY AND SUPPORT FOR LARGE ACCOUNTS AND REQUIRES A LOT OF RESOURCES AND TIME AND EFFORT. EVEN A PRODUCT LIKE ZOOM WHICH IS A FANTASTIC PRODUCT AND THE INDIVIDUAL WAS AT MY SCHOOL THIS MORNING AND USING ZOOM FOR PARENT-TEACHER CONFERENCES, AND WALMART IS A USER OF ZOOM AS WELL WITH TENS OF THOUSANDS OR HUNDREDS OF THOUSANDS OF USERS. YOU HAVE TO HAVE THE RESOURCES TO SUPPORT WALMART. YOU CAN JUST BUY IT UP THE WEB. I THINK IT’S IMPORTANT TO HAVE A GO-TO-MARKET EXPERTISE. AT EMERGENCE AND WE HAVE VOX AND GOOGLE AND SALESFORCE WHO HAVE EXPERTISE IN BUILDING GO- TO-MARKET TEAMS AND IT’S BEEN EFFECTIVE TO HELP OUR COMPANY SCALE. >>YOU TALK ABOUT ZOOM AND SLACK IS ANOTHER ONE THAT SOLD ITSELF SO TO SPEAK AND EMPLOYEES STARTED MOVING ITS WAY UP TO THE UPPER ECHELONS OF COMPANIES, IS THERE ONE WAY OR THE OTHER THAT’S BETTER? THESE DAYS IS A BETTER TO GO BOTTOM-UP OR TALK TO CTLS? >>I DON’T KNOW IF THERE’S A BETTER. THERE’S NO RIGHT WAY. IT’S THE ANTITHESIS OF VIRAL AND PRODUCT DRIVEN. ENTERPRISE SALES RAISE $4 MILLION AND NEVER RAISED ANOTHER PENNY AND IT’S A $25 MILLION COMPANY SO INCREDIBLY CAPITAL EFFICIENT AND ZERO PRODUCT LED SALES. IT’S ALL ENTERPRISE. AND THEN YOU HAVE THE OPPOSITE EXTREME OF A SLACKER ZOOM WHICH IS AT THE LOW END MOVING UP. ALSO VERY CAPITAL EFFICIENT. THE KEY IS BEING INTERNALLY CONSISTENT IN TERMS OF YOUR SALES AND MARKETING ENGINE AND MUSCLE WITH THE MARKET OPPORTUNITY. AND THAT RIGHT FIT, THERE IS PRODUCT MARKET DATA AND THEN THERE IS GO-TO-MARKET FIT AND YOU NEED BOTH. >>THAT’S TRICKY TO FIND. REBECCA, WHEN YOU ARE TALKING TO STARTUPS, IN SOME CASES GROWTH TRUMPS PROFITABILITY AS YOU WERE TALKING ABOUT AND YOU ALSO JASON, HOW MUCH IS A REASONABLE AMOUNT OF YOUR REVENUE TO SPEND ON GROWTH? >>THIS IS A GREAT QUESTION. I THINK IT DEPENDS ON YOUR MARKET TIMING. I’VE BEEN THROUGH A COUPLE OF CYCLES IN THE MARKET NOW AND THERE ARE ALL KINDS OF METRICS OUT THERE YOU CAN READ ABOUT IN TERMS OF DIFFERENT RULES OF SASS MAC AND EVERYTHING ELSE. I THINK IT DEPENDS AND THE METRICS DIVE INTO WHETHER OR NOT YOUR CHURN RATE IS GOOD OR IF IT’S EXPANDING IN THEIR ANNUAL SPEND WITH YOU OR IF THEY ARE CHURNING. I ALWAYS LIKE TO HAVE A VERY CLEAR I EYE IF YOU CAN’T CONTINUE TO FUND THE GROWTH, HOW FAST COULD YOU GET PROFITABLE AND FIND YOURSELF? SO THERE’S A BALANCE THAT COMPANIES SHOULD WALK TO KEEP AN EYE ON THE METRIC AND WHAT IS THE PATH TO PROFITABILITY IF WE NEED TO HEAD IT. IT LOOKS LIKE THE MARKETS WILL CONTINUE TO DO WELL AND EVERYTHING IS UP BUT HAVING LIVED THROUGH A COUPLE OF CYCLES WHERE PEOPLE HAVE A LOT OF MONEY AND WERE WILLING TO LET GO OF IT, IT’S PRUDENT FOR THE BOARD AND FOUNDING TEAM WHAT WOULD HAPPEN AND WHAT IF THEY NEEDED TO DO TO GET PROFITABLE AND INTELLIGENTLY MAKE THOSE GROWTH DECISIONS. THEY CAN BASE IT UPON THEIR CUSTOMER METRICS. AT THE LATER STAGES YOU ARE POINTING OUT. >>GROWTH TRUMPS PROFITABILITY IN THE MARKET TODAY. >>GROWTH ABSOLUTELY TRUMPS. >>YOU HAVE TO GROW AND BE A MARKET LEADER. >>YOU HAVE TO GROW SIGNIFICANTLY. 20% GROWTH RATE DOESN’T CUT IT. YOU NEED TO BE 40% PLUS AND THAT IS A REQUIREMENT IN THIS MARKET TODAY. >>I THINK IT’S A REQUIREMENT IN ALL MARKETS. COMPANIES AT THIS STAGE THAT WE ARE INVESTING, WE NEED TO HAVE COMPANIES AT THAT EARLY STAGE OR BEYOND THAT ARE GROWING 50%, 60%, 70%. WHEN THEY GET BIGGER THE GROWTH RATE SLOWS. ONCE GROWTH IS ABANDONED, NO ONE WANTS TO FUND THESE. >>GROWTH THAT HAS TO KEEP GOING , ABSOLUTELY NO MATTER WHAT. >>CAPITAL EFFICIENCY IS SUPER APART AND. SALES AND MARKETING EFFICIENCY IS THE SINGLE LARGEST COST FOR ENTERPRISE COMPANIES. IF YOU SPEND AN HOUR TO GENERATE $1 OF RECURRING REVENUE AND YOU HAVE TURNED THAT’S NOT A GREAT DEAL. PLEASE LIKE SOON SPEND A FRACTION OF A DOLLAR AND MORE THAN A DOLLAR FOR FOLLOW-ON SO THE LIFETIME VALUE RELATIVE TO THE ACQUISITION COST OF THAT CUSTOMER IS SO MUCH MORE VALUABLE. >>IT’S ALL ABOUT THE LIFETIME. >>CAPITAL EFFICIENCY IS WHAT BUILDS. >>THAT’S IDEAL. THERE ARE MANY COMPANIES THAT OF DONE PUBLIC OFFERINGS IN THE LAST COUPLE OF YEARS THAT HAVE HAD SALES AND MARKETING EXPENSES THAT HAVE EXCEEDED REVENUE. AND AS LONG AS THEY ARE GROWING AT THAT 50%, 60% LEVEL OR 40% EVEN, THE MARKETS ARE GIVING THEM ABSOLUTE CREDIT FOR IT. WILL THEY EVENTUALLY REACH PROFITABILITY? I HAVE ABSOLUTELY NO IDEA. THEY SAY THEY WILL. IT AND THE MARKET DOESN’T CARE. >>THE MARKET CAN TURN LIKE THAT. YOU HAVE TO BE PREPARED. >>THE FORTUNATE OR UNFORTUNATE THING YOU HAVE THREE VCs WHO HAVE LIVED THROUGH UPS AND DOWNS SO IN MANY WAYS WE, AT LEAST I AND I WON’T SPEAK FOR YOU TWO, I’M SORRY, I FIND MYSELF BEING THE NAYSAYER SAYING ALWAYS KEEP AN EYE ON PROFITABILITY. IF YOU HAVE TO GET THERE, BUT ON THE OTHER HAND WHAT I THINK THAT CAN DO AND WE HAVE TO PUT THAT OPTIMISTIC HAT ON, THAT MINDSET CAN LEAVE DOLLARS ON THE TABLE. AGAIN, WE ARE IN THIS BUSINESS OF MAKING HAY WHILE THE SUN SHINES SO WE HAVE TO PUSH THESE COMPANIES TO GROW. OFTENTIMES I MEAN SPENDING MORE THAN YOU GET IN REVENUE. >>YOU ARE SPENDING AND SPENDING BUT NOT EVERYTHING WILL BE SLACK OR ZOOM, SO SOMETIMES THESE COMPANIES THEIR GROWTH SLOWS. YOU HAVE TO TURN TO PLAN B. YOUR JOB AS VCs IS TO TALK TO CORPORATE’S AND TRY TO FIND A HOME FOR YOUR COMPANIES IN THAT CASE, ARE THOSE CONVERSATIONS ANY DIFFERENT NOW THAN THEY WERE? THE PUBLIC MARKETS ARE GETTING SUCH RICH VALUATIONS AND WONDERING WHAT ACQUIRERS ARE MAKING OF COMPANIES NOT ON THE SAME TRAJECTORY? >>THE EVERYDAY MARKET IS REALLY FASCINATING RIGHT NOW. THERE ARE A BUNCH OF VERY, VERY LARGE PUBLIC COMPANIES THAT ARE REQUIRING NOT NECESSARILY FOR STRATEGIC VALUE, FOR NEW PRODUCT EXPANSION BUT ACQUIRING BECAUSE THEY NEED THINGS TO BE BIG AND ACCRETIVE. SO THESE $8 BILLION ACQUISITIONS. IT SALESFORCE BUYING TABLEAU OR MICROSOFT BUYING LINKEDIN. IF THEY’RE GOING TO ACQUIRED THEY EITHER GO REALLY BIG OR THEY ARE GOING TO HAVE TALKED IN ACQUISITIONS OF $200 MILLION OR $100 MILLION OR LESS IN THOSE COULD BE FINE ACQUISITIONS BY THE WAY. IF YOU NOTICE ON RIGHT NOW ARE THE DAYS OF THESE $500 MILLION- $1 BILLION ACQUISITIONS. IT’S NOT HAPPENING. IT MAY, BUT I FEEL LIKE LARGE PUBLIC COMPANIES AREN’T INTERESTED IN THEY TOLD US THAT. >>OUR PHILOSOPHY HAS BEEN YOU HAVE TO ASSUME YOU HAVE TO BUILD AN INDEPENDENT COMPANY. YOU WANT TO BE BOUGHT AND YOU DON’T WANT TO BE SOLD. STUFF TO SELL A COMPANY. IT’S MUCH EASIER TO BE BOUGHT. BEST ALTERNATIVE IS TO HAVE AN INDEPENDENT COMPANY. WHEN COMPANY SLOW THE GROWTH RATE AN IPO IS NOT A POSSIBILITY AND RAISE A LOT OF CAPITAL. IT’S A TOUGH SITUATION. THAT IT COMES DOWN TO GRIT. DOES THE FOUNDER WANT TO SLUG IT OUT AND BUILD A COMPANY AND DO WHAT IT TAKES? I THINK IT TOOK A LOT OF CAPITAL FOR AARON LEVIE TO GET WHERE HE IS BUT IT’S A $7 BILLION BUSINESS AND A GREAT PRODUCT AND GREAT MARKET OPPORTUNITY. BUT IT TOOK GREAT TO DO THAT. >>AND IT TAKES A LOT OF HARD DECISIONS. IF YOU HIT THAT POINT, THE DECISION IS TO CUT AND CUT SOON ENOUGH IN TERMS OF EXPENSES TO TRY TO REINVEST THAT INGROWTH. THOSE ARE HARD DECISIONS TO MAKE THAT ARE OPTIONS FOR ENTREPRENEURS WHO HAVE A LOT OF GRIT, TO LOOK AND SEE WHERE THEY CAN REKINDLE THAT GROWTH. WE HAVE SEEN THAT WITH — >>ONE NICE THING ABOUT SAAS BUSINESSES RECURRING REVENUE BUSINESS. IN 2007 , 2008 THE FINANCIAL CRISIS HAPPEN IN PROFITABILITY MATTERED MORE. WE REDUCED OUR GROWTH RATE AND GENERATED CASH. WHEN THE MARKETS CAME BACK AGAIN WE ACCELERATED GROWTH SO AT A CERTAIN SCALE, WE HAVE THE OPPORTUNITY TO CHOOSE. >>YOU CAN CHOOSE WHICH YOU WANT TO PUSH. >>WHAT IS ONE OF THE MOST COMMON MISTAKES YOU SEE ENTERPRISE COMPANIES MAKE? >>THEY CAN HAVE ALL THE GRIT IN THE WORLD BUT MISTAKES ARE MADE SO WHAT DO THEY TEND TO BE? >>I SEE A LOT OF THEM UNFORTUNATELY. >>LIKE A VP, STAFF OF A MASSIVE ENTERPRISE SALES FORCE TEAM? >>UPMARKET. >>TOO FAST AT MARKET AND REALLY GREAT INITIAL CLIENT OR SALES AND THEN THINK IF I JUST HAD 10 MORE SALESPEOPLE, AND THEY DON’T QUITE HAVE THAT GO- TO-MARKET THING FIGURED OUT QUITE YET. AND THEN THEY END UP SPENDING A TON OF MONEY ON SALES TOO EARLY BEFORE IT IS SORTED OUT. >>GROWING YOUR ACV, THE AMOUNT YOU CAN COLLECT WITH YOUR CUSTOMER IS A SUPER IMPORTANT METRIC IN BUSINESS, BUT IF YOU GO FROM $10,000 OR $20,000 ACV AND STARTING TO SELL $500,000 ACV, SOMETHING IS PROBABLY WRONG. YOU SHOULD THINK ABOUT BEING MORE INCREMENTAL IN THAT GROWTH. I’VE SEEN COMPANIES HAVE FALSE SIGNALS OF SUCCESS BY A BIG CUSTOMER COMING IN KNOCKING ON THE DOOR AND REALIZING THEY DIDN’T HAVE THE CAPABILITIES TO ACTUALLY SERVICE THAT CUSTOMER. MY ADVICE IS ALWAYS GROW AND TRY TO DOUBLE YOUR ACV YEAR- OVER-YEAR, BUT DON’T 5X IT. >>THE COUNTERPOINT IS WE AS VENTURE PEOPLE ARE WANTING GROWTH IN THESE BUSINESSES AND I KEEP SAYING THIS WORD GROWTH, BUT IT REALLY DOES MATTER. WHEN YOU ARE SPENDING IN A STEPWISE FASHION AND A REALLY METHODICAL WAY, IT CAN ACTUALLY CAUSE YOU TO NOT HAVE A LARGE ENOUGH SALESFORCE TO MEET THE GROWTH NUMBERS THAT YOU ARE ANTICIPATING FOR YEAR TWO ARE YOUR THREE OR YOUR FOUR. SO ACTUALLY IT’S REALLY IMPORTANT THAT YOU INVEST AHEAD OF THAT SO YOU CAN COLLECT THE FRUITS OF YOUR LABOR, BUT THERE IS THIS CAUTION THAT WE ALL HAVE IN NOT WANTING TO SPEND BECAUSE WE DON’T NECESSARILY HAVE A LOT OF THOSE INDICATIONS AT THAT EARLY STAGE. THAT’S THE RUB. IT’S A MISTAKE, YES, BUT ALSO A NATURAL OUTCOME OF WHAT WE ALL ARE IN THIS FOR. SO WE JUST HAVE TO HAVE OUR HANDS REALLY DELICATELY AND DEFINITELY ON THE DIAL TO BE ABLE TO MOVE THINGS BACK AND FORTH WHEN WE SEE INDICATIONS OF GROWTH OR SLOWDOWN. >>GOING BACK EVEN FURTHER, HOW DO YOU HELP YOUR STARTUPS I GUESS LAND THAT FIRST BIG CUSTOMER? HOW DO YOU GET THAT PILOT PROJECT TURNED INTO THAT FIRST BIG SALE? >>WE ACTUALLY — WE HAVE VERY EARLY PRODUCT MARKET FIT WITH CUSTOMERS THAT WE CAN VALIDATE AND THERE IS MINIMUM VIABLE PRODUCT. IT’S RARE WE INVEST INCOME THAT’S TOTALLY PRE-PRODUCT AND ZERO CUSTOMERS. BUT FOR THE FIRST ENTERPRISE SIGNIFICANT DEAL, I REMEMBER SITTING DOWN WITH THE SERVICE MAX FOLKS WHEN THEY WERE TALKING TO GE AND THAT WAS LIKE THE ULTIMATE CUSTOMER FOR SERVICE MAX ROUSSEL FIELD SERVICE APPLICATIONS. WE SAT IN THE ROOM AND CONVINCE THEM SOMEHOW TO BED ON SERVICE MAX AS A YOUNG COMPANY A PART OF IT WAS WE BROUGHT TOGETHER FOLKS FROM SALESFORCE ANOTHER SUCCESSFUL SAAS BUSINESSES AND PRESENTED A VISION HOW WE WOULD BUILD SERVICE MAX INTO A MEGA COMPANY AND ULTIMATELY GE BECAME THE ACQUIRER OF THE COMPANY FOR $1,000,000,000.08 YEARS LATER. AN INTERESTING STORY. >>GOING BACK, CONSUMER VERSUS ENTERPRISE, IS THERE A FIRST MOVE OR ADVANTAGE IN ANY WAY FOR A SAAS COMPANY? WE SEE SO MANY COMPANIES THAT ARE EXACTLY THE SAME BUT I WONDER — >>I HAVE AN OPINION ON IT AND I THINK IT’S A FIRST MOVER DISADVANTAGE. HAVING GROWN UP AT P&G IT’S FUNNY BECAUSE EVEN WITH THEM THEY SAID LET SOMEBODY ELSE SPEND ALL THE MONEY ON IMPROVING THE MARKET AND TALKING TO CONSUMER MAKING SURE THERE’S A NEED AND WE WILL COME IN AND KILL THEM WITH BETTER TECHNOLOGY AND BETTER SALES. SO THERE ARE VERY FEW COMPANIES. LOOK AT SOON. GOOGLE HANG OUT SHOULD OWN THAT MARKET. THERE ARE VERY FEW COMPANIES OUT THERE THAT ARE TRULY FIRST MOVER. PERHAPS AMAZON WITH SELLING THE BOOKS ONLINE, BUT OTHER THAN THAT, IF YOU NAME A COMPANY YOU CAN NAME THREE THAT CAME BEFORE IT. SO I THINK THERE’S A LOT OF TALK ABOUT FIRST MOVER ADVANTAGE AND WE ALWAYS CHALLENGE PEOPLE AND HAVE A DISCUSSION LIKE TELL ME A TRUE FIRST MOVER, BECAUSE IN HINDSIGHT WHEN YOU REWRITE HISTORY THEY LOOK LIKE FIRST MOVERS BECAUSE YOU DON’T HEAR ABOUT THE FIVE THAT DIED BEFORE YOU. BUT OFTENTIMES IT’S SMART TO SEE A COMPANY AND NOT DOING THINGS RIGHT, THE COMPANY WILL HAVE TECH THAT THEY HAVE TO OVERCOME AND WILL SEIZE A TON OF MONEY ON JUST PROVING TO THE MARKET THAT THIS IS SOMETHING THAT NEEDS TO HAPPEN. IF YOU COME IN ON TOP OF THAT WITH A CLEANER AND BETTER SOLUTION, ZOOM IS A PRIME EXAMPLE. AND A REALLY GREAT GO-TO- MARKET. YOU CAN DEFINITELY WIN. I’M NOT A HUGE FIRST MOVER ADVANTAGE I THINK SOME HAVE THIS NETWORK EFFECT WHERE THE LANDGRAB KIND OF MENTALITY DOES PAY OFF. RARELY IS THAT TRUE IN THE ENTERPRISE SPACE. YAMMER WAS LIKE A NEW USE CASE IN SOME WAYS. AND THERE WAS A NETWORK EFFECT OF THE MORE PEOPLE WITH THE PRODUCT. >>THE WE HAVE SLACK. THAT CAME AFTER. AND WE HAVE FACEBOOK AND MY SPACE. >>YEAH, SO IT IS HARDER. NO QUESTION. THE EVANGELICAL NEW USE CASES ARE RISKIER BETS. SOMETIMES A PAYOFF, THOUGH. >>REBECCA, WE’RE ALMOST OUT OF TIME, YOU SOUNDED AN OPTIMISTIC NOTE AT THE BEGINNING, YOU SAID IT SEEMS LIKE THINGS ARE STILL GOING VERY WELL. BUT TO ME, IT DOES FEEL LIKE THERE COULD BE FINALLY A RECESSION AROUND THE CORNER. WHO KNOWS? I WAS WONDERING, ARE THE CONVERSATIONS ANY DIFFERENT WITH YOUR STARTUPS RIGHT NOW IN TERMS OF WAY AND HOW MUCH THEY SHOULD HAVE? >>I THINK GOING INTO THE ELECTION NEXT YEAR, I SAY, YOU KNOW, WHAT THE MARKETS DON’T LIKE HIS UNCERTAINTY. SO NO MATTER HOW THAT COMES OUT, I THINK THINGS TEND TO FREEZE UP BEFOREHAND A LITTLE BIT. SO I THINK IT IS WISE TO TELL PEOPLE TO RAISE WHAT THEY CAN NOW AND CAPITOL IS FLOWING PRETTY FREELY. >>WE HAVE A PORTFOLIO REVIEW COMING UP, I THINK IT IS THE FIRST TIME IN SEVERAL YEARS WE HAVE SAID WE WANT TO DO A STRESS TEST ON THE PORTFOLIO. HOW MUCH CASH IS IN THE BANK? WHAT IS THE RUNWAY? WHAT IS THE FUNDRAISING PLAN? LIKE LITERALLY EVERY COMPANY IN THE PORTFOLIO. HOW ARE THEY MANAGING EXPENSES? I THINK NOW IS THE TIME TO BE A LITTLE BIT MORE THOUGHTFUL. >>ARE YOU GOING TO DO THE REST IN PEACE THING NOW? >>NO. [ LAUGHTER ] >>THANK YOU SO MUCH FOR COMING. IT WAS GREAT TO SEE YOU. [ APPLAUSE ]>>>OKAY. IF YOU WANT TO LEARN MORE FROM THESE THREE, AND I THINK YOU SEE THEY HAVE A LOT OF VALUABLE INSIGHTS, HEAD OVER TO THE BREAKOUT ROOM. THEY WILL ADDRESS QUESTIONS IN THE NEXT FIVE MINUTES. FOR THE REST OF YOU, WE ARE VERY HAPPY TO INTRODUCE OUR NEXT ONSTAGE CONVERSATION WITH THE COFOUNDER AND CO-CEO WITH OUR ESTEEMED COLLEAGUE MODERATING. THANK YOU. >>>WE’VE BEEN TRYING TO GET YOU TO ONE OF THESE EVENTS. THANKS FOR MAKING IT OUT. THE STORY I READ ABOUT THE FOUNDATION MYTH IS WHEN YOU FOUNDED THE COMPANY, HE NEVER WANTED TO WEAR SUITS AND WANTED TO MAKE MORE THAN AU$48,000. I ASSUME THE MONEY WORKED OUT, WHAT ABOUT THE SUIT? >>NEVER HAVE TO WEAR A SUIT. >>NOT FOR THE QUEEN? NOBODY? >>WEDDINGS, FUNERALS, THAT TYPE OF THING. TIES ARE OFF-LIMITS COMPLETELY. >>I THINK THAT SPEAKS TO THE PHILOSOPHY IN THOSE EARLY DAYS BECAUSE WHEN I THINK OF SUITS IN THE ENTERPRISE I THINK OF SALESPEOPLE. YOU NEVER HAD A SALESFORCE. >>IT STARTED ALMOST 19 YEARS AGO NOW. AND AT THE TIME SOFTWARE WAS SOLD EITHER IF YOU’RE TOO YOUNG YOU DON’T REMEMBER THIS BUT THE SHANK RACK BOX IN A BEST BUY STORE OR SOLD ON THE GOLF COURSE. AND IF YOU WANTED TO SELL THE BUSINESSES YOU WERE SELLING ON THE GOLF COURSE. AND LARGELY IT WAS FORTUNE 500 COMPANIES THAT COULD AFFORD THE TRANSACTION COSTS AND IT IS GOING TO COST SIX OR SEVEN FIGURES TO DO THAT. AND WE FELT WITH THE ADVENT OF THE INTERNET THAT THAT WOULD CHANGE. PARTIALLY I THINK BECAUSE WE HAD MORE SHARE REGAINS THROUGH THE INTERNET AS TEENAGERS AND FELT LIKE OF COURSE WE CAN BUY SOFTWARE THAT WAY. SO WE PIONEERED SELLING SOFTWARE ONLINE AND I THINK THAT SOME THINGS WE DID WELL IN THE EARLY DELLS THAT ARE STILL APPLICABLE NOW IN DIFFERENT WAYS WAS THAT WE USED OPEN- SOURCE SOFTWARE TO BUILD THINGS FAST. SO WE COMPARED IT WITH HOW THE COMPANIES, IT HAS BEEN 20 YEARS BUILDING SOMETHING WE CAN REPLICATE OR GET TO THAT SAME LEVEL IN A YEAR OR TWO. WE WERE ONE OF THE FIRST PEOPLE TO USE GOOGLE ADVERTS IN TERMS OF ACQUIRING CUSTOMERS, AND I REMEMBER WE WOULD SPEND $.10 A CLICK ON THINGS ARE NOW 10 OR $20 A CLICK, AND THE MARKETING BUDGET BACK THEN, SEEM LIKE A LOT OF MONEY TO SPEND ON GOOGLE. YOU SPEND MORE THAN THAT IN AN HOUR ON GOOGLE. YOU KNOW, WE SOLD ONLINE, WE HAD A SELF-SERVICE MODEL BECAUSE WE USE IT AS FIRSTLY MIKE AND I COULD NOT DO IT IF WE HAVE BEEN ASKED. >>WHAT IS THE BACKGROUND BY >>I HAD AN ENGINEERING DEGREE. HAVE BUSINESS, HAVE ENGINEERING DEGREE AND BOTH MIKE AND I DROPPED OUT OF UNIVERSITY TO START THE COMPANY. ONE OF THE MOST ENTREPRENEURIAL THINGS I DID BEFORE THAT WAS SELL COOKIES FOR THE SCOUTING ORGANIZATION. THAT IS THE CLOSEST I GOT TO SELLING ANYTHING. ANYWAY, WE BUILT A PRODUCT AND SOLD IT LOCALLY, AND WE REALIZED WE COULDN’T HAVE A SALESPERSON AT VARIOUS TIMES SO HAD TO SELL ITSELF ON THE INTERNET. HAD TO BE EASY TO USE. SO WE PIONEERED REALLY EASE-OF- USE OF GETTING STARTED AND SO FORTH THROUGH THE BUSINESS MODEL. >>HOW MONEY — HOW MUCH WAS TOYS AND HOW MUCH WAS NECESSITY? >>SOME PEOPLE FEEL LIKE YOU LOOK AT THEM AND THEY HAVE A 20 HER BUSINESS PLAN ON HOW IT IS ALL GOING TO WORK OUT AND I AM IN ADMIRATION OF THOSE PEOPLE THINK IN THE EARLY DAYS WE WERE 21-YEAR-OLD STUDENTS HE REALLY DIDN’T WANT TO GET A REAL JOB, AND SO, ONE OF THE THINGS, THE HUNCHES IN THE EARLY DAYS WORKED OUT WELL. ONE OF THOSE WAS EARLY ON A PIVOTAL MOMENT IN ATLASSIAN, WE CREATED IMPORTERS FOR COMPETITIVE PRODUCTS. IF YOU THINK ABOUT IT , FROM ONE SOFTWARE PRODUCT TO ANOTHER, USED TO INVOLVE CONSULTANTS AND YOU MIGHT GET A BIG CONSULTING FIRM TO COME IN AND IT WOULD TAKE SIX MONTHS TO DO, AND WE BUILT ONE-BUTTON IMPORTER FROM ONE OF OUR COMPETING PRODUCTS. I THINK THAT WAS A HUGE INFLECTION POINT FOR US BECAUSE SOMEONE COULD GO FROM BLACK AND WHITE, THIS OTHER PRODUCT TO TECHNICAL AND ATLASSIAN IN A COUPLE OF HOURS BY PRESSING A BUTTON. THAT WAS VERY UNUSUAL. >>IN THE EARLY DAYS, I’M GUESSING THERE WAS A LOT OF SHADOW I.T. HAPPENING, TEAMS BUYING YOUR PRODUCT WITHOUT NECESSARILY THE BLESSING OF THE CTO OR CIO. >>THAT IS SOMETHING MORE AND MORE, BRING YOUR OWN DEVICE, BRINGING YOUR OWN SOFTWARE NOW THAT PEOPLE TALK ABOUT. BUT ATLASSIAN WAS BUILT ON THAT IN THAT WE WOULD HAVE VERY LARGE BANKS AND WOULD ONE DAY GET A CALL FROM THE CIO OF THE BANK WHO WAS I REALLY NEED TO HAVE A CHAT WITH YOU. YOU KNOW, WE NEED TO HAVE A CONVERSATION. IT TURNS OUT YOU ARE LIKE A HUGE VENDOR TO US, AND WE USE YOUR STUFF EVERYWHERE. OKAY, WHAT YOU WANT TO CHAT ABOUT? I DON’T KNOW. I FEEL LIKE I SHOULD CALL YOU AND HAVE A CHAT BECAUSE YOU ARE A HUGE VENDOR AND WE DIDN’T REALLY HAVE ANYTHING TO DISCUSS. IT TURNS OUT SELLING TO TEAMS AND ENTERPRISE, IF YOU’RE SELLING THE RIGHT PRICE POINT THEY CAN SWAP YOUR CURRENT CREDIT CARD, WHICH UP UNTIL THE LAST 15 OR 20 YEARS NEVER HAPPENED BECAUSE SOFTWARE WAS SO EXPENSIVE IT HAD TO GO ON BUDGETS AND SO FORTH. WE ARE SEEING THIS NOW WITH EVERYTHING FROM SLACK TO ZOOM AND OTHER COMPANIES WHERE THEY GET INTO AN INDIVIDUAL TEAM AND GO FROM THERE. IT SOUNDS SIMPLE, BUT THERE ARE A FEW THINGS WE WANT IF PEOPLE IN THE AUDIENCE ARE DOING THEIR OWN STARTUPS IN THE ENTERPRISE SPACE, IF YOU WANT TO GO THAT WAY, YOU HAVE TO THINK ABOUT IT IN A CERTAIN FASHION. WE FOUND IF YOU’RE GOING TO GO INTO A CERTAIN TEAM, YOU HAVE TO COEXIST WITH YOUR COMPETITORS. YOUR WORKDAY NEVER HAS TO WORK WITH MICROSOFT HR, YOU HAVE ONE OF THEM AT A TIME. IF YOU GO AT A TEAM LEVEL, YOU ARE GOING TO BE WITH COMPETING PRODUCTS AND YOU HAVE TO HAVE INTEGRATIONS WITH PRODUCTS YOU MIGHT COMPETE WITH OR MIGHT WANT TO DISPLACE ONE DAY. SO THAT WAS REALLY IMPORTANT. HAVE TO HAVE A PRODUCT THAT IS USEFUL FOR THE TEAM. SOME PRODUCTS ARE ONLY USEFUL FOR AN ENTIRE ORGANIZATION BECAUSE THEY REQUIRE A WHOLE ORGANIZATION GUIDE OR THAT NUMBER OF PEOPLE TO DO IT. IT HAS BEEN A PRICE POINT THAT PEOPLE CAN START THEIR CREDIT CARD AND GET GOING. THERE MIGHT BE OTHER VERSIONS THEY PAY MORE FOR IF THEY HAVE TO GET GOING IN A TEAM LEVEL PARKING IS WE FIGURED THAT OUT BY ACCIDENT 20 YEARS AGO. IT IS STILL TRUE TODAY. >>IF HE HAD TO PLAY GOLF WITH ANYBODY YET TO MAKE A CELL? >>I AM TERRIBLE AT GOLF. IT DOES SEEM LIKE GOLF COURSES ARE ON THE DECLINE THESE DAYS. I CAN’T HELP BUT THINK THAT MIGHT BE HOUSE ENTERPRISE SOFTWARE SOLD. >>VERY SAME IS TRUE FOR STEAKHOUSES. WHAT WAS THE FIRST BIG ENTERPRISE SALE YOU MADE AND HOW DID THAT COME ABOUT? WAS IT JUST ONE OF THESE COINCIDENTAL TEAM SALES? >>YEAH, THE FOR SALE IT REALLY STANDS OUT FOR ME WAS, WE SOLD TO A COMPANY CALLED AMERICAN AIRLINES THAT YOU WOULD ALL KNOW. WE DIDN’T REALLY KNOW THEM COMING FROM AUSTRALIA. THEY SENT US A FACTS WITH A CREDIT CARD NUMBER WRITTEN DOWN, AND WE NEVER HEARD FROM THEM BEFORE. THEY HAD NOT CALLED US UP OR ANYTHING LIKE THAT. IT WAS OUR FIRST SALE. THESE DAYS WE SELL TO COMPANIES 150,000 DEPUTIES AROUND THE WORLD, AND THEY TRANSACT ONLINE. I WAS TAKEN BACKSTAGE, I DON’T KNOW TOO MANY FOUNDERS IN THE AUDIENCE THESE DAYS ARE WAITING FOR THE FACTS MACHINE TO DELIVER MONEY LIKE WE DID AT THAT TIME. >>TO HELP DO YOU STILL HAVE A FACTS MACHINE. >>NO. THE GREAT THING ABOUT SOFTWARE IS IF IT WORKS, IT IS GOT ZERO TRANSACTIONAL COSTS. IF SOMEONE SWIPES A CREDIT CARD ANY HANDOVER LICENSE KEYS, YOU SPIN UP IN AN INSTANT. EFFECTIVELY IT IS MARGINAL COST. >>NOW THAT YOU HAVE 150,000 CUSTOMERS, THERE MUST BE THOSE WHO WANT MORE SERVICE FROM YOU, WHO WANT MORE OF A WHITE GLOVE SERVICE FROM YOU. WHAT ARE YOU DOING FOR THEM? >>USUALLY RESULTS TO COMPANIES FROM FIVE, PEOPLE USE OUR PRODUCTS WITH ANYTHING BUT ONE, BUT FIVE PEOPLE WILL BE A TEAM TO 50,000 PEOPLE, AND HISTORICALLY WE HAVE BEEN PRETTY FAMOUS FOR NOT HAVING A SALESFORCE. PEOPLE SAY THAT IS GREAT, HOW DO YOU SELL THINGS. AND IS ALL THE EFFORT TO MAKE PRODUCTS ILL-SERVED. IT HAS EVOLVED. WE NOW HAVE SALESPEOPLE IN VARIOUS PARTS OF THE BUSINESS DOING ROLES. BUT WHY ARE WE DIFFERENT TO OTHER COMPANIES? WHAT I FOUND IS THAT WE WOULD EXPERIMENT WITH PEOPLE IN SALES, BUT WHEN WE HAVE TO SCALE IT UP, WE ARE VERY THOUGHTFUL ABOUT HOW WE DO THAT. AN EXAMPLE, OUR VERY FIRST SALESPERSON WAS ACTUALLY, WE CALL THEM LOYALTY ADVOCATES NOW, BUT THEIR JOB WAS TO MAKE SURE CUSTOMERS RENEWED THEIR SOFTWARE. IT WAS A SEMI-SUBSCRIPTION MODEL, YOU WOULD HAVE SERVICES YOU WOULD PAY FOR EVERY YEAR. WE HIRE THREE PEOPLE TO DO THAT FIRST JOB. WE HIRED TWO PEOPLE SITTING IN DOWNTOWN SAN FRANCISCO, AND WE HIRED EFFECTIVELY A ROBOT AS OUR THIRD PERSON. >>A PERSON OR A ROBOT? >>LIKE AN EMAIL ROBOT EFFECTIVELY. WE HAD A CONTROL GROUP. AND I DON’T THINK THE SALESPEOPLE WERE TOO HAPPY TO HAVE A CONTROL GROUP BECAUSE THEY ARE RACING NO ONE. IT WAS INTERESTING TO CHAT TO THE PRESIDENT AT THE TIME AND CONVINCE THEM THAT IS WHAT WE WANTED TO DO. WE FOUND THAT HAVING SALESPEOPLE WAS GOOD, BUT WASN’T ANYWHERE NEAR AS GOOD AS WE THOUGHT IT WAS BECAUSE THE CONTROLLED GROUP DID PRETTY WELL. EVEN TODAY, FOR THAT GROUP OF PEOPLE WE HAVE RENEWALS ON, WE WILL SEND AN EMAIL 90, 60, 30 DAYS BEFORE AND ALL THE WAY THROUGH THEIR RENEWAL TIME, BUT WE DIRECTLY PICK UP THE PHONE AND CALL THEM UNTIL 30 DAYS AFTER RENEWAL. AND EVERY YEAR WE EXPERIMENT WITH THAT. WILL TAKE A COHORT AND CALL THEM 30 OR 90 DAYS EARLIER OR DO DIFFERENT THINGS WITH THEM. AND WE FOUND THAT IF I BRING IT 30 DAYS BEFORE THE RENEWAL IS DUE, I HAVE TO CALL FIVE TIMES MORE PEOPLE AND MAKE A MARGINAL IMPROVEMENT ON MY CONVERSION RATE. SO I THINK WE HAVE ALREADY TAKEN A VERY EXPERIMENTAL APPROACH. WE DON’T KNOW THE RIGHT ANSWER. I COMPARE THAT WITH SOME OF HER ENTERPRISE PEERS WHERE THEY WOULD SAY LET’S HAVE SALESPEOPLE WHO WILL GO CALLOUT ENTERPRISE CUSTOMERS. ARE BEST COHORT, LET’S GO TARGET THEM. WHILE THERE IS A SHORT-TERM BUMP IN REVENUES, MIDMARKET PEOPLE COME UP BEFORE TOO LONG WITHIN A YEAR OR TWO THEY NOW HAVE SALESPEOPLE TOUCHING OF A PART OF THE CYCLE, EVEN IF THAT WASN’T NECESSARILY THE MOST OPTIMAL THING, IT IS JUST THE MOST EXPEDIENT WAY TO GET REVENUE. AND IF YOU ARE IN A PUBLIC MARKET AND HAVE TO GET REVENUE THIS QUARTER, OR YOU ARE VENTURE-CAPITAL BACKED AND HAVE TO SHOW A RESULT IN THE SHORT TERM, SAFETY WILL ALWAYS GET YOU SHORT-TERM RESULTS. WE ARE LUCKY ENOUGH THAT WE WENT TO 10 YEARS TO GO PUBLIC. SO WE HAD A LOT MORE FLEXIBILITY TO KIND OF PROVE OUT THE REVENUE MODEL. AND EVEN TODAY WE EXPERIMENT WITH SALES. >>AND YOU HAVE SOME ANNOUNCEMENTS TODAY THE KIND OF FIT IN THERE AS WELL. >>ONE OF THE THINGS WE HAVE DONE WELL OVER THE YEARS IS FROM SMALL TO LARGE COMPANIES, AND WE HAVE HAD MOST OF OUR SALES HISTORICALLY WOMEN STARTED WERE PEOPLE WOULD BUY OUR SOFTWARE AND INSTALL IT ON THEIR OWN SERVICE. AND EVEN TODAY WE FIND OUR LARGEST COMPANIES WERE HISTORICALLY KIND OF USING THAT SERVER-BASED PRODUCT. AND WE SCALE THEM UP AND HAVE A VERSION THAT SCALES FOR TENS OF THOUSANDS OF YEARS. WE FOUND THAT MOST OF OUR SMALL CUSTOMERS, ARE STARTUPS AND SO FORTH, THEY WERE ALL USING OUR CLOUD-BASED PRODUCTS. WILL BE FOUND IN THE LAST COUPLE OF YEARS IS THAT EVEN THE BIGGEST OF BIG COMPANIES ARE TURNING OUT AND SAYING WE NOW WANT TO BE ACROSS UNIT CLOUD. IT DOESN’T MAKE SENSE FOR US NOW TO BUY HARDWARE, PUT IT IN OUR OWN DATACENTER AND THEN MAINTAIN ALL THAT. WE WANT YOU TO DO ALL THAT FOR US. >>THAT SEEMS TO BE ON THE WAY UP. >>DEFINITELY SEEMS THAT THE SAAS AND CLOUD IS THE WAY OF THE FUTURE. I AM TALKING ABOUT THE BIGGEST OF THE BIG COMPANIES, REGULATED INDUSTRIES, PEOPLE YOU WOULD NOT HAVE THOUGHT WOULD BE INTERESTED ARE TURNING THE CORNER NOW. SO WE MADE A LOT OF IMPROVEMENTS TO OUR CLOUD OFFERINGS. A YEAR AGO WE HAD A THING CALLED ACCESS WHICH ALLOWED US TO HAVE USERS MANAGE, THE COMPANIES TO MANAGE THEIR USERS. BECAUSE IMAGINE A TEAM-BASED SOFTWARE, SOMEONE IS USING ACROSS THEIR ENTIRE ORGANIZATION, AS AN ORGANIZATION YOU WANT TO MAKE SURE WHEN SOMEONE LEAVES THE COMPANY THAT WE PUT THE DATA DOWN AND A WHOLE BUNCH OF SECURITY AROUND THE. WE INTRODUCED THE PRODUCT A YEAR AGO. AND TODAY WE’RE ANNOUNCING PRICING CHANGES. IT IS IMPORTANT BECAUSE PRICING AND PACKAGING, ONCE YOU’VE GOT YOUR PRODUCT MARKET, HOW YOU PRICE AND DO THAT AND DO IT DISRUPTIVELY IS REALLY IMPORTANT. WE HAVE ALWAYS WANTED TO BE REALLY AFFORDABLE AT THE LOW END SO EVERY SINGLE COMPANY IN THE WORLD CAN AFFORD OUR PRODUCTS, AND WE ALSO WANTED TO MAKE SURE WE SCALE UP AT THE HIGH IN. BUT WE HAVEN’T DONE THAT WELL AND CLOUD TO DATE. TODAY WE’RE ANNOUNCING, THE PEOPLE AT THE OFFICE PRESSING BUTTONS TO GO LIVE. WE HAVE, WE’RE ANNOUNCING FREE VERSIONS OF CONFLUENCE TO JOIN THE OTHER PRODUCTS WE HAVE. >>WHICH MEANS PRETTY MUCH ALL YOUR PRODUCTS HAVE A FREE VERSION. >>ALL ARE PRODUCT NOW HAVE A FREE VERSION TO GET STARTED. THAT IS REALLY IMPORTANT BECAUSE WE KNOW THAT MANY IN THE AUDIENCE, IF YOU ARE DOING A START UP, YOU MIGHT WANT TO USE ATLASSIAN PRODUCTS BECAUSE YOU KNOW YOU CAN USE A LOT OF PRODUCTS WHEN YOU ARE A FIVE PERSON TEAM, BUT WHEN YOU’RE 15 OR 20 PEOPLE, ATLASSIAN HELPS YOU SCALE AND IT IS BETTER TO GET STARTED A FIVE PEOPLE THAN TO GO THROUGH CHANGING ALL THAT OUT. SO NOW WE HAVE FREE VERSIONS FOR EVERY STARTUP OF ALL OUR PRODUCTS. THE OTHER THING WE’RE ANNOUNCING TODAY, ARE PREMIUM VERSIONS OF ALL OF OUR CLOUD PRODUCTS. THAT MEANS FOR LARGER ENTERPRISES WHO WANT TO MOVE FROM RUNNING STUFF THEMSELVES TO THE CLOUD, THEY GET PREMIUM THAT INVOLVES HIGH LEVELS OF SLA , STORAGE, HIGH LEVELS OF SUPPORT AS WELL AS THINGS LIKE DATA WORK AND A LOT OF OTHER THINGS THAT BIGGER COMPANIES ARE AFTER. SO WE’RE REALLY PROUD TO ANNOUNCE THOSE HERE. WE THINK THAT CHANGING THE PRICING AND ALLOWING ALL COMPANIES TO BE IN THE CLOUD IS REALLY IMPORTANT. >>FOR SURE. YOU CAN READ ABOUT IT ON TECH CRUNCH. WHY DID IT TAKE YOU SO LONG TO GET TO THIS POINT? I ASSUME A LOT OF ENTERPRISES WANTED THESE KINDS OF SLAS. THEY WANTED EXTRA SERVICES. >>IT IS INTERESTING THAT AS A COMPANY WE HAVE BEEN PRETTY DISRUPTIVE ON PRICING. ONE OF THE THINGS, IMPORTS FROM COMPETITORS BEING ONE OF THE INFLECTION POINTS. ONE OF THE OTHER INFLECTION POINTS WAS, WE RELEASED 10 DARTER STARTER LICENSES OF OUR PRODUCT. IN CONTEXT, WE USED TO HAVE THREE VERSIONS YEARS AGO OF OUR PRODUCTS. ONE WOULD BE $1200, ONE $2500 AND $4800. AND THOSE NUMBERS WERE PURELY PICKED OUT OF THE AIR BECAUSE MY CO-FINDER READ A TEXT BOOK THE SIDE YOU SHOULD HAVE THREE VERSIONS OF YOUR PRODUCT. AND WE ROUGHLY MADE IT UP FROM THERE. >>WORKED OUT ALL RIGHT. >>YEAH, AND THESE DAYS A WHOLE BUNCH OF PRICING PROFESSIONALS OUT THERE WILL TELL YOU THE SAME THING. THAT WE TOOK OUT $1200 PRODUCT AND RELEASED IT FOR $10. BECAUSE WE FELT THAT THERE IS A WHOLE BUNCH OF PEOPLE OUT THERE IN COUNTRIES AROUND THE WORLD THAT COULDN’T AFFORD THAT. AGAIN, IF I LOOK AT THAT, COST US ABOUT 5 TO 10% OF REVENUE YEARS AGO AND THAT WAS A HUGE INFLECTION POINT. AND ON THE CLOUD, IT IS HARDER TO DO THAT BECAUSE THERE IS REAL COST OF RUNNING SOFTWARE IN THE CLOUD, AND IN THE LAST YEAR WE’VE MADE HUGE INVESTMENTS IN REDUCING THOSE COSTS NOW SO WE GOT TO A POINT WHERE WE CAN OFFER FOR YOUR VERSIONS OF OUR CLOUD. >>ANOTHER OUTSIDE OF THESE ANNOUNCEMENTS, TWO YEARS AGO YOU ANNOUNCED STRIDE. ONE OF THE LATEST PRODUCTS, FOUR PRODUCT TO ANNOUNCE THAT WAS COMPLETELY NEW, AND YOU SOLD IT OFF TO SLACK WITHIN A YEAR AND A HALF TWO YEARS. WHAT HAPPENED THERE? >>YOU COME TO THESE CONFERENCES TO LEARN FROM OTHER PEOPLES MISTAKES. THAT IS WHAT YOU WERE HERE. SO WE HAD A PRODUCT CALLED HIP CHAT YEARS AGO THAT WAS GREAT. A GREAT PRODUCT THAT WAS GROWING REALLY FAST. HE WAS TRIPLING YEAR ON YEAR. AND THIS WAS FANTASTIC. EVERYTHING ELSE IS DOUBLING, THIS IS TRIPLING. WE ARE DOING GREAT. IT TURNS OUT THE MARKET WAS WAY LARGER THAN EVEN THAT. WE SHOULD’VE BEEN GOING 10 TIMES YEAR ON YEAR. WE EVENTUALLY CONCEDED THAT MARKET TO SLACK, WHO HAD DONE A GOOD JOB AT MAKING THEIR SPACE IN THE MARKET. >>DID YOU JUST MISSED THAT WAY? >>WHEN YOU MAKE MISTAKES, YOU SIT DOWN AND LET ME TELL YOU WHAT GRANDPA DID SO YOU DON’T MAKE THE SAME ONES. STARTUP FOUNDERS, WHAT WE FOUND IS THAT WHEN YOU GROW FROM THREE PEOPLE, WHICH IS THE COMPANY WE ACQUIRED, THE NUMBER OF PEOPLE IT TAKES TO DO SOMETHING DOESN’T GO THREE, FOUR, FIVE, IT GOES THREE, FOUR, FIVE, 30 BECAUSE A TEAM OF THREE OPERATES IN A CERTAIN MANNER AND A TEAM OF 10 NEEDS TO ACTUALLY CHANGE ALL THE PRACTICES IN THE WAY THEY WORK AND SO FORTH. THAT MEANT WE REALLY NEEDED TO GO TO 30 PEOPLE AS OPPOSED TO INCREMENTAL INVESTMENTS. THAT IS A LESSON WE LEARNED WITH OTHER ACQUISITIONS WE HAVE DONE. NOW WE PUT MORE PEOPLE ON DAY ONE. I THINK THE OTHER ONE IS THE MARKET THAT IS GREAT AND SO FORTH, EVENING PRODUCT GROWING RIDICULOUSLY FAST AND HAS GREAT CUSTOMER FEEDBACK MAY NOT BE GETTING MARKET SHARE VIS-C-VIS COMPETITORS. THAT IS SOMETHING THAT NOW WE WOULD PUT MORE WEIGH MORE INVESTMENT BEHIND THAT PRODUCT. WE REBUILT THE PRODUCT CALLED STRIDE ON THE ATLASSIAN PLATFORM. AMAZING PLATFORM FOR ALL OF OUR PRODUCTS TO RUN ON. THINGS LIKE IDENTITY AND OTHER THINGS. AS AN ASIDE, IS A FOUNDER, YOU HAVE TO MAKE A CHOICE SOMETIMES, DO WANT TO BE ONE PRODUCT COMPANY OR DO YOU WANT BE MULTIPLE PRODUCT COMPANY. YOU KNOW, SOME STAGE YOU NEED TO MAKE THE DECISION THAT REALLY AFFECTS EVERYTHING YOU DO. IF YOU ARE ONE PRODUCT COMPANY, YOU HAVE A HEAD OF PRODUCT MANAGEMENT THAT KNOWS TO PRODUCT MANAGER THE PRODUCT. IF YOUR MULTI PRODUCT COMPANY COMING OF A MANAGER FOR PRODUCT MANAGEMENT BUT NOT ANY INDIVIDUAL PRODUCT. SO WE HAVE CHOSEN THAT MULTIPRODUCT COMPANY AND BUILD AN ENTIRE PLATFORM AROUND IT AND BUILT STRIDE, THE FIRST THING WE BUILT ON THAT PLATFORM, BUT THE ISSUE OF THAT WAS THAT EVEN THOUGH WE THOUGHT IT WAS A BETTER PRODUCT, BY THE TIME WE GOT IT OUT, THERE WAS MIND SHARE ELSEWHERE IN THE MAIN CASES AND ECOSYSTEM, THINGS THAT ARE HARD TO BE. SO WE THOUGHT IS THAT DOING THAT, LET’S TEAM UP WITH SLACK INSTEAD, SO WE’RE WORKING TOGETHER WITH THEM ON BUILDING OUT GREAT INTEGRATIONS WITH THEIR PRODUCTS, AND WE DO WHAT THEY DO WELL AND THEY DO WHAT THEY DO WELL. YOU HAVE A BIT OF A STAKE IN SLACK AND RETURN IT PROBABLY WILL MAKE SOME MONEY. >>YEAH, WE GOT A CHANCE TO INVEST IN SLACK AS A RESULT OF THIS PARTNERSHIP. >>LOOKING FORWARD. WHAT IS NEXT FOR ATLASSIAN? IS IT THE MOVE TO THE CLOUD THAT WE WERE TALKING ABOUT EARLIER WERE MAYBE YOU’RE GIVING UP ON YOUR SERVER PRODUCTS? WHAT IS HAPPENING? >>I DON’T USE THE WORDS GIVING UP. BUT THE MARKET IS MOVING TOWARDS CLUB. WE ARE SEEING THAT MORE THAN EVER BEFORE. THIS IS FROM US WHEN WE REALLY HAVE STRENGTH ON BOTH SIDES. BUT THE THING WE ARE SEEING FROM A CUSTOMER PERSPECTIVE IS THAT THE COMBINATION OF I.T. AND SOFTWARE, THERE WAS A MOVEMENT A LITTLE WHILE AGO CALLED AGILE WERE ENGINEERS AND BUSINESS ANALYSTS WERE PUT TOGETHER INSTEAD OF THROWING DOCUMENTATION OVER THE WALL AND PROGRAMMERS DOING IT, YOU ARE IN THE SAME ROOM AND TALK. THESE DAYS, UNTIL RECENTLY, AND HAS BEEN DEVELOPERS READ — PRODUCED BY THE ARIES AND THROW THEM TO THE I.T. TEAM WHO ARE RESPONSIBLE FOR DEPLOYMENT. WE ARE FINDING PEOPLE SAY LET’S PUT THAT IN THE ROOM, LET’S PUT PEOPLE IN THE SAME ROOM TO HELP THAT HAPPEN FASTER. SO DEV OPS IS A REALLY HUGE MOVE WE’RE SEEING EVERYWHERE. IT IS CHANGING THE WAY THAT IT GETS DELIVERED AND DEPLOYED AND MONITOR. A LOT OF EXCITING THINGS HAPPENING THERE. BUT WE ARE GETTING A LOT OF FEEDBACK FROM CUSTOMERS ON YOU ARE AMAZING FOR SOFTWARE, WE WANT YOU TO MAKE SURE YOU’RE ALSO MISSING FOR THOSE PEOPLE THAT TRADITIONALLY DEPLOY THE SOFTWARE. >>AND THEY WANT TO PLAY GOLF WITH YOU. [ LAUGHTER ] THANK YOU VERY MUCH. [ APPLAUSE ]>>>LADIES AND GENTLEMEN. UP NEXT WE HAVE A SPONSORED INNOVATION BREAK. PLEASE WELCOME TO THE STAGE, MONTE GRAY, DJ FROM SAP AND SIGN J FROM VMWARE AND YOUR MODERATOR OF SAPPHIRE VENTURES. [ APPLAUSE ] GREAT TO BE HERE WITH ALL OF YOU TODAY. WE ARE GOING TO BE DIVING INTO A TOPIC THAT IS PRETTY MUCH THE NUMBER ONE CONCERN FOR A LOT OF STARTUPS, CEOS. THAT IS THE TOPIC OF HOW DO YOU GET TO SUSTAINABLE PREDICTABLE RECURRING ENTERPRISE REVENUE STREAMS WHETHER FROM ENTERPRISE CUSTOMERS OR PARTNERS. AND WE ARE SEEING THAT STARTUPS ARE BECOMING A PRETTY COMMONPLACE COMPONENT WITHIN ENTERPRISE I.T. PORTFOLIOS. IN FACT, SAPPHIRE VENTURES JUST WRAPPED UP IN INNOVATION INDEXING STUDY RECENTLY WHERE WE FELT REMARKABLY THAT CIOS WERE ESTIMATING THAT CLOSE TO 10% OF THE I.T. BUDGETS BY THEIR ESTIMATE WERE BEING CONSUMED BY PRODUCTS FROM VENTURE BACKED STARTUPS BUT WE ALSO KNOW THAT ONLY A SMALL SLIVER OF VC BACKED STARTUPS WILL GET TO THE REVENUE CLIP TO PUT THEM ON THE PATH TO UNICORN STATUS. WE HAVE HERE TODAY IS A LINEUP OF EXECUTIVES AND FRANKLY NO THE ENTERPRISE CUSTOMER AND GO TO MARKET MOTION IN A WAY THAT FEW OTHER EXECUTIVES IN THE INDUSTRY DO. WILL INSPECT THE NEXT 20 MINUTES TRYING TO SHAKE THEM DOWN FOR HIS MANY TRADE SECRETS ON ENTERPRISE SELLING AND PARTNERING AS WE CAN. WE HAVE CHIEF OPERATING OFFICER OF VMWARE RESPONSIBLE FOR SALES, MARKETING ALLIANCES, PRESIDENT OF SAP NORTH AMERICA DRIVING SALES STRATEGY AND OPERATIONS ACROSS THE ENTIRE REGION AND MONTE GRAY, HEAD OF CORPORATE DEVELOPMENT AT OKTA AND IT WAS NOT THAT LONG AGO A START UP A SELF. AT THE WERE FOUNDED 10 YEARS AGO, AND TODAY SOME 15 BILLION IN MARKET CAP AND ACCOUNTING AND ENTERPRISING YOUR OWN. >>ALL OF US AT SOME POINT WERE A STARTUP. >>THAT IS CORRECT. >>A SMALL START UP. >>I WANTED TO POST THE FUNDAMENTAL QUESTION OF HOW ENTERPRISE TECHNOLOGY BUYERS VIEW STARTUPS. IF IT IS OKAY I WILL START WITH THE TWO OF YOU FIRST BECAUSE I THINK COLLECTIVELY YOU SORT OF REPRESENT SOME OF THE VERY LARGEST COHORTS OF ENTERPRISE TECHNOLOGY BUYERS ACROSS I.T. LINES OF BUSINESS, AND ACROSS INDUSTRIES. TELL US A LITTLE BIT ABOUT HOW YOUR GLOBAL 2000 FORTUNE 500 CUSTOMERS VIEW ENGAGEMENT WITH STARTUPS. HOW DO THEY THINK ABOUT THE GREATEST AREAS OF CUSTOMER VALUE THEY WILL DERIVE AND HOW DO THEY THINK ABOUT RISKS? >>SURE. FIRST OFF, IT’S GREAT TO BE HERE. APPRECIATE BEING ON STAGE WITH ALL OF YOU. I WISH THE AUDIENCE WATCHING ONLINE COULD SEE THE VIBE IN THE ROOM HERE AND AS WE WERE WALKING AROUND EARLIER TODAY. WITH SAP, I’M VERY FORTUNATE THAT WE HAVE 150,000 CUSTOMERS HERE IN NORTH AMERICA. EACH WEEK I SPENT TIME IN FRONT OF CUSTOMERS ALL OVER THE COUNTRY IN EVERY SINGLE INDUSTRY LISTENING TO SOME OF THEIR CHALLENGES. DISCUSSING OPPORTUNITIES THAT THEY MIGHT HAVE OUT THERE IN THE MARKETPLACE. A COUPLE OF THEMES I HEAR THAT I THINK ARE RELEVANT FOR THIS AUDIENCE IS, FIRST AND FOREMOST, TALENT MANAGEMENT. THESE COMPANIES ARE LOOKING AT HOW TO BE ACQUIRE AND RETAIN THE MOST TALENTED PEOPLE IN THE INDUSTRY SO WE CAN BECOME THE EMPLOYER OF CHOICE IN OUR INDUSTRY. SO FOR THOSE OF YOU OUT THERE, WOULD HAVE THREE PEOPLE IN YOUR COMPANY OR 300 PEOPLE IN YOUR COMPANY, TALENT MANAGEMENT SHOULD ABSOLUTELY HAVE A SEAT AT THE TABLE AS A STRATEGIC PRIORITY ORGANIZATION. I ALSO SEE COMPANIES LOOKING AT BRANDS. THEIR BRAND GROWTH AND BRAND PROTECTING THE BRAND. IF YOU THINK ABOUT HOW LONG IT TAKES FOR YOU TO BUILD A POSITIVE BRAND, TO BUILD THAT APPEARANCE WITH THE CUSTOMERS, AND IT CAN BE GONE LIKE THAT. WE LIVE IN INEXPERIENCED ECONOMY. IF THERE IS A NEGATIVE EXPERIENCE THAT SOMEONE MIGHT HAVE WITH YOUR BRAND, THAT CAN BE VERY DETRIMENTAL AND YOU CAN BE DIGGING OUT OF THAT FOR A LONG TIME. THESE ARE ISSUES THAT OUR CUSTOMERS ARE LOOKING FOR COMPANIES LIKE SAP AND VMWARE TO SOLVE FOR THEM. THERE ALSO LOOKING AT STARTUPS TO HELP SOLVE SOME ISSUES AND CHALLENGES. I THINK THE VALUE THAT THE STARTUPS ARE PROVIDING IS, JUST REALLY THAT FRESH OUTSIDE A PERSPECTIVE THAT THEY MIGHT NOT HAVE WHERE THEIR TRADITIONAL ORGANIZATIONAL STRUCTURES, THEIR SILOS, THEIR WAY OF DOING THINGS THAT THEY’VE ALWAYS DONE ENCUMBERS THE ABILITY TO INNOVATE A LITTLE BIT. SO THEY LOOK AT STARTUPS TO HELP THEM WITH THAT. I SEE THE ENGAGEMENTS BEING VERY POINTED, VERY POINTED AROUND BUSINESS OUTCOMES, LESS ABOUT THE FLASHY TECHNOLOGY AND MORE ABOUT, HERE IS A STRATEGIC PRIORITY WE HAVE. HERE’S A BUSINESS OUTCOME WE’RE LOOKING FOR. CAN YOU HELP SOLVE THAT? THEY WILL BRING STARTUPS IN FOR A VERY SPECIFIC USE CASE TO TALK THROUGH HOW CAN THAT HELP ME IN THIS AREA. THEY WANT YOU TO BE VERY GOOD AT SOMETHING AND NOT JUST AVERAGE AT A LOT OF THINGS. THAT IS HOW YOU BUILD AN ENTERPRISE FOUNDATION, THE DISABLED ENTERPRISE PRODUCT. THAT IS HOW SAP GOT STARTED, AND WE STARTED WITH FINANCIALS AND WITH THE CUSTOMER ABCD. WE DO THAT VERY WELL AND CAME BACK WITH LOGISTICS IN THE SUPPLY CHAIN. THEY ARE LOOKING FOR YOU TO BE VERY GOOD AT SOMETHING AND TO BE ABLE TO COME IN AND PROVER TECHNOLOGY OUT IN A LIMITED USE CASE ENVIRONMENT. >>IT IS SORT OF INTERESTING. WE ARE WERE ALL SAP PEOPLE AT SOME POINT. THAT IS THE COMMON THREAD HERE. I WOULD JUST ADD A A FEW THINGS. I THINK ALL OF US AS WE GET TO BE BIGGER COMPANIES, VMWARE A LITTLE OVER $10 BILLION, SAP WORTH 30 BILLION, OKTA PROBABLY $1 BILLION PRODUCING, THE DANGER WE FACE IS BIGGER COMPANIES IS THAT WE WILL PROBABLY GET SCALED PRETTY WELL. BUT THE DANGER THAT WE HAVE IS WE WILL MISS SPEED. EVERYTHING IN LIFE AND TECHNOLOGY IS ABOUT COMBINING SPEED AND SCALE. YOU FOLKS GET THE SPEED PART PRETTY WELL AS STARTERS. OBVIOUSLY YOU’RE COUNTING ON US TO LEARN ABOUT SCALE, AS YOU GROW BIGGER YOU WOULD ABOUT SCALE AND IF YOU CAN BE AN ELEPHANT AND A CHEETAH IN ONE WEEK AT THE SKILL AND SPEED TOGETHER, THAT IS THE MAGIC. I SPENT A LOT OF MY TIME, ESPECIALLY AS WE HAVE SOUGHT TO BRING INNOVATION INTO OUR COMPANY AND THE THING THAT IS BEEN SPECIAL ABOUT VMWARE IN THE SAME THING WHEN I WAS STARTING TO DO THAT WAS INNOVATE IN NEW AREAS THAT WERE OUTSIDE THE CORE OF WHAT YOU ARE KNOWN FOR. SAP, A LOT OF MY TIME THERE WAS, WE WERE KNOWN FOR ERP AND I WAS HELPING THE COMPANY WITH ANALYTICS. HERE AT VMWARE WE ARE KNOWN FOR VIRTUALIZATION, BUT THERE’S SO MUCH MORE THAT COMPANIES CARE ABOUT THAT WE HAVE BECOME A CLOUD INFRASTRUCTURE COMPANY. YOU DO THAT BECAUSE YOU’RE LEARNING FROM OTHER COMPANIES WHO GET THE INNOVATION AND SPEED PART. YOU CAN’T JUST FIRE ALL OF THEM. IF YOU COME TO VMWARE CONFERENCES, WE HAVE 100,000 PEOPLE TO GO TO CONFERENCES ACROSS THE WORLD AND MAYBE 1 MILLION PEOPLE WATCHING, WE PROLIFERATE A LARGE NUMBER STARTUPS IN THE COMMUNITY WHO ARE THEIR OWN HAVE BECOME SUCCESSFUL COMPANIES. WE MAY ACQUIRE A FEW OF THEM BUSY TO REALLY BUILD A PLATFORM THAT CAN MAKE A VERY VIBRANT ECOSYSTEM WITH STARTUPS. LARGELY BECAUSE OUR CUSTOMERS ASK US TO GO A PARTNER WITH A FEW OF THESE FOLKS. WE ARE DOING SOMETHING SPECIALIZED FOR THEM. A CIO MIGHT HAVE A RELATIONSHIP WITH THE SAP OR VMWARE OR A FEW OTHERS THAT ARE THE BIG STRATEGIC VENDORS, BUT THEY WANT TO HAVE A HANDFUL OF REALLY CREATIVE STARTUPS THERE ALSO WORKING WITH. MANY CIOS ARE BANKS OF SILICON VALLEY VISITS WHERE THEY MEET WITH BIG VENDORS AND ALSO STARTUPS. IT IS REALLY IMPORTANT FOR BIG COMPANIES TO HAVE THOSE STARTUPS ON OUR RADAR BECAUSE THEY HAVE BECOME THE FUTURE VMWARE AND SAP. SO ME PERSONALLY WHAT I DO, I TRIED TO SPIN ONE DAY A WEEK. IT MIGHT BE A FRIDAY , NEEDING AT LEAST 12 STARTUPS, AND GETTING TO KNOW THEIR CEO AND TEAMS. IN MANY CASES THERE IS SOMETHING I CAN LEARN FROM THE CEO ABOUT WHAT THEY ARE DOING THAT IS DIFFERENT FROM WHAT VMWARE DOES AND SCALE. IT IS USUALLY SOMETHING ABOUT SPEED. JUST LAST WEEK WITHOUT MAYBE THE COMPANY, I DON’T WANT TO PUT THEM ON THE SPOT, I FOUND SOMETHING REALLY INTERESTING ABOUT THE WAY THEY ARE DOING DEMAND GENERATION AND MARKETING. I ASKED WOULD YOU MIND IF WE COME TO YOUR OFFICES AND YOU DO A LECTURE TO US ON HOW YOU ARE DOING CREATIVE NEXGEN MARKETING. THAT IS JUST A WAY BY WHICH ALL THE SUDDEN THE STARTUP IS INCREDIBLY SPECIAL. THEY’VE GOT THE TIME OF A SPENDING TIME. IF YOU HAVE THE GROWTH MINDSET COMING BY THE WAY, THAT IS OUR CUSTOMERS THINK TOO. THE CUSTOMERS WHO ARE SUCCESSFUL, WHO HAVE THE GROWTH MINDSET WHERE THEY ARE NOT SATISFIED WITH THE STATUS QUO BECAUSE YOU UNDERSTAND THIS BUT DON’T UNDERSTAND THESE THINGS. MANY OF YOU FOLKS WERE SUCCESSFUL ENTREPRENEURS HAVE THAT IN YOUR DNA AND THAT IS THE REASON I AM HERE AT THIS CONFERENCE, THERE ARE THINGS I WANT TO LEARN FROM YOU GUYS. >>WHAT ARE SOME OF THE MOST COMMON RECURRING MISTAKES YOU SEE STARTUPS MAKE WITH THEIR PITCHING THEIR INNOVATION MESSAGE TO POTENTIAL PARTNERS LIKE YOU GUYS? >>I THINK DJ MADE A GOOD POINT ABOUT STAY FOCUSED. STAY FOCUSED ON YOUR VALUE PROPOSITION YOU MIGHT HAVE. ONE COMMON MISTAKE WITH THE AS YOU MAY HAVE AN INCREDIBLE TECHNICAL INNOVATION OR GOOD VISION, BUT WHEN YOU’RE TALKING TO A CUSTOMER OR PARTNER THINK ABOUT THEIR CUSTOMERS OR PARTNER CUSTOMERS, A VALUE PROPOSITION TO SOMETHING THAT MATTERS TO THEM VERSUS YOU CAN DO EVERYTHING ELSE OUT THERE. WHAT I OFTEN SEE IS COMPANIES TRY TO PRESENT THEMSELVES LIKE IT IS AN INVESTOR INSTEAD OF A CUSTOMER. PRACTICE THE ELEVATION, HONED THE THESIS. OFTENTIMES WITH A START UP THERE FIGURING OUTFIT. HAVE A THESIS AND TEST WITH CUSTOMERS AND PARTNERS, BUT BE OPEN AND STAY FOCUSED. >>YOU BROUGHT UP A GOOD POINT THERE. SOME OF THE MISTAKES I SEE WHEN SALESPEOPLE AND SALES ORGANIZATIONS WILL GO OUT AND MISS PROVIDING A POINT OF VIEW THAT IS TAILORED TO A BUSINESS OUTCOME. THEY GET VERY FOCUS ON WE’VE GOT SOME COOL TECHNOLOGY AND THIS IS, LET’S GO RIGHT IN HERE AND THEY GOT THE TUNNEL VISION ON I’M GOING TO FEATURE FUNCTION. THEY LEAVE THE BIGGER PICTURE OF WHAT IS THE ULTIMATE OUTCOME, THE BUSINESS VALUE AND HOW DO WE WORK BACKWARDS FROM THE STRATEGIC PRIORITY THAT THIS IS GOING TO SOLVE FOR THAT ORGANIZATION AS OPPOSED TO JUST FOCUSING ON A FEATURE AND FUNCTION. I THINK THAT IS ONE OF THE BIG MISTAKES AND THE BIG MRS. I SEE SOMETIMES WITH STARTUPS. >>I WANTED TO TOUCH BRIEFLY ON THE TOPIC OF INCUMBENTS. YOU CAN’T REALLY TALK ABOUT A STARTUP JOURNEY FROM INCEPTION INTO THE ENTERPRISE CUSTOMER BASE WITHOUT TALKING ABOUT SOME OF THE PRE-EXISTING THINGS THEY WILL ENCOUNTER ALONG THE WAY. IS SPECIFICALLY WHEN YOU’RE TALKING ABOUT A PREESTABLISHED DOMAIN OF SPENDING, A PREESTABLISHED SORT OF TECHNOLOGY CATEGORY, YOU’RE GOING TO HAVE A NUMBER OF PRE- EXISTING PLAYERS THAT OFTEN HAVE LONG-STANDING RELATIONSHIPS WITH THE CUSTOMER AND ALL KINDS OF OTHER ADVANTAGES. IF YOU COULD SHARE ONE OR TWO PIECES OF ADVICE THAT YOU MIGHT GIVE TO A STARTUP CEO THAT IS GOING INTO A DOMAIN THAT ALREADY IS POPULATED BY INCUMBENTS, HOW SHOULD THEY THINK ABOUT NAVIGATING THEIR JOURNEY AND FINDING A WAY TO REALLY HOLD THEIR OWN RELATIVE TO DEEPLY ESTABLISH PLAYERS? >>I THINK AN AMAZING STORY IS THAT IT IS A DAVID AND GOLIATH. AGAIN AND AGAIN. SAP WAS THAT AT SOME POINT, 45 YEARS AGO WHEN THE COMPANY WAS STARTED AND TOPPLING INCUMBENTS THAT SHOULD’VE BEEN SAP. WHEN A FEW PEOPLE STARTED VMWARE NOBODY THOUGHT VIRTUALIZATION WAS POSSIBLE. AND THEY INVENTED IT OUT OF STANFORD AND FROM WHERE THAT WASN’T BORN ONE OF THE FASTEST GROWING COMPANIES. SO I THINK YOU HAVE TO HAVE FIRST OFTEN INCREDIBLE DAVID AND GOLIATH MINDSET THAT YOU’RE GOING TO TOPPLE GOLIATH. IT DOESN’T MATTER YOU A MUCH SMALLER THAN THAT. BUT YOU HAVE SOMETHING ABOUT WHAT YOU BUILT THAT IS EITHER FROM, HAVE TO BE A TECHNOLOGY. CAN’T BE JUST GO TO MARKET. THAT IS DISRUPTIVELY INNOVATIVE. AND THAT THE INCUMBENT WILL ALWAYS HAVE AGAIN SCALE BUT NOT SPEED. IF YOU HAVE SOMETHING THAT IS DISRUPTIVELY INNOVATIVE, YOU CAN MOVE FASTER. I THINK OKTA HAS PROVED THAT WELL. IN SOME SENSE, VMWARE HAS OVER THE COURSE OF TIME EVEN AS WE HAVE GOTTEN BIGGER HAVE TO NAVIGATE AMONG OTHER BIGGER INCUMBENTS . I WILL GIVE YOU AN EXAMPLE. THE EARLY DAYS OF VMWARE, THE COMPANY THAT SHOULD HAVE PROBABLY OBLITERATED US IN THE EARLY DAYS WITH MICROSOFT BECAUSE THE BULK OF OUR VIRTUALIZATION IS ON WINDOWS SERVERS. BUT THERE WAS ONE THING VMWARE DID REALLY WELL, FOR A LONG TIME MICROSOFT DENIED THAT LYNN NICKS EXISTED. THIS WAS NOT 20 YEARS AGO. AND THAT GAVE, FILTHY BETTER PRODUCT AND BECAME THE PROPOSITION IN THE EARLY DAYS. THE EARLY DAYS WATCHING FROM THE OUTSIDE AND THEY DID THAT REALLY WELL AND AT SOME POINT MICROSOFT ADMITTED IT EXISTED, BUT BY THAT TIME VMWARE WAS ON THE MAT. SO SOMETHING AS SMALL AS THAT THAT PUT US ON THE MAP. AND I SEE STARTUPS DOING THAT AGAIN AND THEY HONE IN ON THAT DAVID VERSUS GOLIATH MINDSET AND IT STARTS TO POP AND 50, 500 AND, WANT TO GET TO 1 BILLION YOU HAVE TO WATCH THE NEXT ARTICLE IS NOT TRYING TO COME AND DISRUPT YOU. >>I WANTED TO SWITCH GEARS BRIEFLY TO TALK ABOUT WHAT THE STARTUP ECOSYSTEM MEANS TO YOUR INDIVIDUAL COMPANIES AND YOUR OWN INNOVATION STRATEGIES. I THINK YOU TOUCHED ON WHAT THAT ENGAGEMENT LOOK LIKE FOR VMWARE EARLIER ON. BUT IF YOU COULD JUST TALK A LITTLE BIT ABOUT WHAT ROLE STARTUPS PLAY AND THE INNOVATION STRATEGIES GOING FORWARD. OUR MISSION IS TO ENABLE ANY COMPANY TO USE ANY TECHNOLOGY. THAT IS A BROAD CHARTER. PLENTY OF ROOM FOR INNOVATION. YOU THINK ABOUT THE OKTA INTEGRATION. WE HAVE 6500 AND THAT CAN INVOLVE THE FUNNEL OF ENGAGEMENT YOU HAVE WITH A COMPANY LIKE THAT THAT INVOLVES COMARKETING AND API INTEGRATION ALL THE WAY DOWN TO MAYBE SOME COMMERCIAL RELATIONSHIPS FOR A RESELL. WE ALSO HAVE AN INVESTMENT FUND TO HELP ALONG THAT JOURNEY. IN THE ODD SITUATION WE COULD ALSO ACQUIRE YOU. I THINK OKTA IS STILL A YOUNG COMPANY, 10 YEAR ANNIVERSARY, FIVE ACQUISITION SO FAR. THOSE OF ALL RESULTED IN MAJOR PARK LINES FOR THE COMPANY. THERE IS A BROAD SURFACE AREA TO ENGAGE WITH IN YOUR START UP, AND THE KEY PIECE OF ADVICE I WOULD GIVE HIS UNDERSTAND WHERE YOU FIT IN THEIR PARTNER JOURNEY AND THEIR PHILOSOPHY AND HAVE THAT THESIS AND WORK WITH THEM. >>YOU SAID IT VERY NICELY. AT SAP, LIKE A, YOU CAN’T ACQUIRE EVERYBODY. THE HAVE TO HAVE THIS MENTALITY OF WORKING WITH PARTNERS OUT OF THE ECOSYSTEM BECAUSE THAT IS WHAT OUR CUSTOMERS WANT US TO DO. THEY DON’T WANT US TO BE CLOSE LOOPED. THEY WANT US TO PROVIDE OUR OFFERINGS SO OTHER COMPANIES CAN PLUG THEIR OFFERINGS INTO OURS. WE REALIZE THAT. SO VERY MUCH LIKE OKTA WE PARTNER WITH ORGANIZATIONS WHERE WE SEE THERE IS A PARTICULAR NICHE OR FIT THAT FITS VERY COMPLIMENTARY INTO OUR PRODUCT LINE THAT MAYBE NOT BEYOND OUR PRODUCT ROADMAP THAT WE CAN PROVIDE THAT VALUE TO A CUSTOMER AND PLUGGING IT INTO OUR OVERALL ENVIRONMENT. IN SOME CASES WE WILL MAKE SOME ACQUISITIONS. BUT OBVIOUSLY, SAP HAS ACQUIRED SOME PRETTY BIG COMPANIES OVER THE PAST TWO YEARS. WE’RE MOSTLY DOING TUCK IN ACQUISITIONS NOW. WE COULD NOT PASS UP THE OPPORTUNITY FOR QUAL TRICKS AND WHAT THAT CAN DO AND HOW THAT TOUCHES EVERY SINGLE PRODUCT AREA, THE EXPERIENCE MANAGEMENT OF THAT AND HOW THAT RESONATES IN THE MARKET PLACE. WE HAVE ABOUT 25 COMPANIES THAT WE RESELL. YOU THINK ABOUT HOW YOUR PRODUCT MIGHT FIT INTO THE STRATEGY, A COMPLEMENTARY STRATEGY TO SAP, IS THAT SALESFORCE OF OVER 1000 PEOPLE HERE IN NORTH AMERICA THAT ARE SELLING THOSE PRODUCTS. HUGE REVENUE GAIN, HUGE REVENUE BASE FOR THAT ORGANIZATION. AND HUGE VALUE WE CAN PROVIDE CUSTOMERS BY INTEGRATING THEM INTO OUR PORTFOLIO. >>LET ME ADD ONE OTHER THING WHICH I WOULD ACT AS INCUMBENT. IT DOESN’T QUITE FIT THE DAVID AND GOLIATH NARRATIVE, BUT IT IS IMPORTANT FOR STARTUPS. ONE WAY TO FIGHT THE INCUMBENT IS TO JUST FIGHT THEM, THE OTHER PART IS TO PARTNER WITH THEM AND JOIN THEM. BECAUSE EVEN AT OUR STAGE, A $10 BILLION COMPANY, DESCRIBED AS IS IN THE LAND OF OTHER BIG INCUMBENTS. SO WHO IS A THREAT TO VMWARE NOW? THE BIG PUBLIC CLOUDS AMAZON, GOOGLE, WHOEVER. IT WAS A POINT FOR US THREE YEARS AGO WILL REFILL FOR US TO TURN THE INCUMBENT INTO A FRIEND WE NEEDED A REALLY STRATEGIC PARTNERSHIP AND NOT VIEW THEM AS THE ENEMY. TO THE EXTENT THAT YOU CAN ACTUALLY MAKE THAT INCUMBENT, SOMETIMES IT IS NOT POSSIBLE BECAUSE YOU HAVE TO FIGHT THEM, BUT SOMETIMES THERE IS A BERLIN WALL MOMENT WHERE THE U.S. AND SOVIET UNION GET TOGETHER IN 1987. AND WHEN WE DID THAT WE FOUND ALL OF THE SUDDEN THE NARRATIVE THAT CHANGE FOR US WAS SO FUNDAMENTALLY DIFFERENT. WE HAVE BECOME AN ARMS BROKER TO ALL THE PUBLIC CLOUDS, A HUGE DIFFERENT LEAP. WE HAVE DONE THE SAME THING RECENTLY LEVERAGING THIS AND LAST WEEK JUST ANNOUNCED BUYING PIVOTAL AND BECOMING A MAJOR FORCE THERE. THE OTHER LESSON I WOULD SHARE WITH YOU IS TO THE EXTENT THAT YOU COULD BECOME PART OF, NEW JOY HAS A SLIGHT, IF YOU SEE A PARADE HAPPENING, GRAB A BATON AND BE AT THE FRONT OF THE PARADE BUT DON’T TRY TO FIGHT THE PARADE BECAUSE IT IS HAPPENING. OPEN-SOURCE IS A GOOD EXAMPLE OF THAT. IF YOU ARE A STARTUP AT THE BEGINNING OF THAT I COULD JOIN A PARADE AND MAKE THE INCUMBENT JOIN YOU, YOU GET 10 TIMES THE IMPACT YOU CAN HAVE ON YOUR OWN. >>PARTNERSHIPS BETWEEN VENTURE BACKED STARTUPS AND LARGE TECH GIANTS TO HAVE A SOMEWHAT MIXED TRACK RECORD IN THE SENSE THAT THEY CAN CONSUME A LOT OF RESOURCES FROM THE STARTUP SIDE AND SOMETIMES DELIVER SUSTAINABLE TOPLINE GROWTH AND SOMETIMES DON’T. IN A FEW WORDS, IF YOU COULD CALL OUT THE KEY SUCCESS INGREDIENTS OR PATTERNS THAT STARTED CEO SHOULD LOOK FOR WHEN THEY’RE TRYING TO FIGURE OUT WHETHER TO INVEST RESOURCES IN PURSUING ALLIANCE WITH A TECH TRY, WHAT MIGHT BE A FEW WORDS OF ADVICE. >>VERY QUICKLY, BECAUSE WE SEEN THE NUMBER OF SUCCESSFUL STARTUPS WE HAVE ACQUIRED, I WAS SAY THE CEOS AND THEIR TEAMS THAT WE LIKE ARE FOLKS WHO ARE JUST, THEY HAVE GOT GRIP AND IN A SENSE THEY ARE MANY STEVE JOBS. THIS IS A WILL CONQUER THE WORLD. EVEN IF THEIR BUSINESS ISN’T AS BIG, THEY HAVE THAT MINDSET. THEY UNDERSTAND PRODUCT AND GO TO MARKET VERY WELL. AND THEIR CONSTANTLY, RUTHLESSLY FOCUSED ON THEIR PEOPLE. HIRING, RECRUITING, RETAINING, AND THOSE QUALITIES ULTIMATELY, IF WE COULD SCALE THEM, WE ACTUALLY LIKE KEEPING THOSE PEOPLE CAUSE THEY COULD RUN BIGGER BUSINESSES FOR US. WE OFTEN TRY TO KEEP CEOS OF COMPANIES WE ACQUIRE FOR AS LONG AS WE CAN. SOMETIMES THEY GET THE BUG YOU WANT TO DO IT AGAIN AND FORTUNATELY. BUT A GENERAL MANAGER AT A BIGGER COMPANY IS A PERSON WHO IS REALLY DONE WELL AT A STARTUP AND CEO, AND THEN TO BUILD A BIG BUSINESS. I THINK THE BEST ARE THE MANAGERS WERE PEOPLE WHO WERE AT ONE POINT IN TIME WERE STARTUP CEO. >>AND A COUPLE OF WORDS EACH, WHICH EMERGING TECHNOLOGY IN THE ENTERPRISE ARE YOU MOST EXCITED ABOUT THAT YOU BELIEVE IS AN AREA OF UNMET DEMAND WERE STARTUP SHOULD BE DELIVERING INNOVATION? >>I THINK FROM THE IDENTITY STANDPOINT. THE MULTI CLOUD TREND RIGHT NOW IS IN THE EARLY INNINGS. THAT WILL SHIFT TO CONTROL PLAN FOR A VARIETY OF DIFFERENT OFFERINGS WHETHER IT IS SECURITY, SAAS MANAGEMENT, ATTENTIVE INNOVATION WITH THE ROLE OF DATA IN MACHINE LEARNING AS WELL. >>I HAVE TO GO WITH THE EXPERIENCE MANAGEMENT. IS A $40 BILLION INDUSTRY. BEING ABLE TO PROVIDE YOUR CUSTOMERS A BETTER EXPERIENCE FOR THEIR CUSTOMERS AND I CAN PLUG INTO THAT. THE AUGMENTED REALITY. THESE ARE HOT THINGS THAT WILL BE IN THE ENTERPRISE ZONE. >>I AM EXCITED ABOUT A LOT OF THINGS. THE ONES I AM PROBABLY MOST RECENTLY EXCITED ABOUT, CONTAINERS AND SECURITY. BOTH INDUSTRIES ARE GOING TO RAPIDLY BE CHANGED. I LOOK FORWARD TO STARTUPS LIKE YOU INTERVENING INNOVATING THOSE AREAS. >>TERRIFIC. THAT IS A WRAP. THANK YOU FOR YOUR TIME. >>THANK YOU. [ APPLAUSE ].>>>HI AGAIN EVERYONE. I ACTUALLY THOUGHT THAT WAS A PRETTY USEFUL CONVERSATION HOW TO ADAPTER STRATEGY. A COUPLE OF QUICK HOUSEKEEPING NOTES. IF YOU WOULD LIKE TO SUBMIT QUESTIONS FOR ONE OF OUR SESSIONS TODAY, YOU CAN DO THAT. ALSO, I’M SORRY, YOU HAVE TO USE THE CODE TC ENTERPRISE. ALSO, IF YOU WOULD LIKE TO FIND A TRANSCRIPT OF ANY OF THE CONVERSATIONS, HE COULD DO THAT AND LOOK UP TC ENTERPRISE. WITHOUT FURTHER ADO, WE’RE REALLY EXCITED TO BE WELCOMING SUSAN PRESCOTT, VP OF APPLE IN CONVERSATION WITH OUR EDITOR AND CHIEF.>>>♪ ♪ ♪ ♪ WELCOME. >>THANK YOU. >>THANKS FOR BEING HERE. >>IT IS A PLEASURE. >>NAILING IT SO FAR. APPLE IS IN THE PROCESS OF MAKING A BIG TRANSITION IS ONE WAY TO PUT IT. DEFINITELY A PUSH ON THE CONSUMER SIDE INTO SERVICES TO FLESH OUT THE SERVICES BUSINESSES. OF IS THE, THE HARDWARE BUSINESSES ARE WELL-ESTABLISHED AND UNDERSTANDABLE TO THE MARKET, BUT WHAT DOES THE ENTERPRISE SIDE OF THAT LOOK LIKE? >>SO TREMENDOUS OPPORTUNITY. A LOT OF COMPANIES OFFERING SERVICES FOR APPLE. WE HAVE A FEW THINGS THAT ARE TARGETED SQUARELY AT BUSINESS FROM A SERVICES POINT OF VIEW THAT WE CAN TALK ABOUT. ONE OF THEM IS OUR TECHNOLOGY CALLED APPLE BUSINESS MANAGER, WHICH IS ONE STOP SHOP FOR I.T. WHERE YOU CAN CREATE MANAGE APPLE IDS AND PURCHASE AND DISTRIBUTE APPS, AND YOU CAN SET YOUR POLICIES WITH PROTOCOLS TO FEED INTO THE MDM SOLUTION YOU MIGHT BE USING. THAT SERVICE WE STARTED ABOUT A YEAR AND A HALF AGO. IT IS A FOR FREE SERVICE AVAILABLE TO BUSINESSES, AND ACTUALLY NEVER BEFORE STATED MATTHEW, HOT OFF THE PRESS, WE HAVE, WE JUST PAST 80,000 ORGANIZATIONS, WHICH INCLUDES CORPORATIONS WITH SUBSIDIARIES AND SO FORTH THAT ARE TAKING ADVANTAGE OF APPLE BUSINESS MANAGER. >>THAT IS AN INVOLUTION OF THE MDM SOLUTION. >>WE USED TO HAVE SOMETHING CALLED DEVICE ENROLLMENT, THE DEP SOLUTION. WE HAD A VOLUME PURCHASE PROGRAM AND HAD SOME DISPARATE PIECES, SOME OF THEM ON THE POLICY SIDE, SOME OF IT ON THE APP SIDE, AND WAS A LITTLE BIT OF A HASSLE. WE REALLY DO WANT TO REMOVE FRICTION, AND SO WE WERE GETTING A LOT OF FEEDBACK FROM I.T. DEPARTMENTS AND MAYBE SOME OF YOU HERE TODAY SAYING YOU’VE GOT TO MAKE THIS SIMPLER. SO WE CONSOLIDATED WHAT THEY MIGHT WANT TO DO MANAGING A FLEET OF APPLE DEVICES INTO THIS APPLE BUSINESS MANAGER. SO THAT IS ONE OFFERING THAT WE HAVE FROM A SERVICES POINT OF VIEW. >>FIRST PARTY SOFTWARE, LIKE BUSINESS MANAGER, BUSINESS CHAT IS ANOTHER ONE YOU OFFER. IS THIS LIKE A PILLAR OF THE APPLE ENTERPRISE STRATEGY? OFFERING FIRST PARTY TOOLS? >>YEAH, WE THINK WE CAN DO IT ANY MEANINGFUL WAY OR DIFFERENTIATED WAY WORD HELPS REMOVE FRICTION IN THE PROCESS. WE LOOK TO PROVIDE THAT. SO BUSINESS CHAT, FOR ANYONE NOT AWARE, IS A RIFF OFF MESSAGES WHERE CUSTOMERS CAN COMMUNICATE INDIRECTLY TO A BUSINESS. FOR EXAMPLE, JUST BY TEXTING THROUGH MESSAGES THEIR QUESTION OR ISSUE. THAT IS BEEN A GREAT ADDITION TO THE PORTFOLIO AS WELL. AND THAT, EVEN APPLECARE IS A BIG PART OF THE SERVICE OFFERING. WE HAVE A DEDICATED APPLECARE FOR ENTERPRISES ANOTHER SERVICE OFFICER. >>YOU SO YOU DON’T HAVE TO BRING 300 DEVICES TO THE APPLE STORE. IT IS A LITTLE AWKWARD. THAT DIDN’T ALWAYS WORK WELL. WE HAVE AN OFFERING THAT HAS BEEN IN PLACE FOR LITTLE WHILE. WE BEEN EVOLVING IT AS WE HAVE GROWING DEPLOYMENTS. WE HAVE HUNDREDS OF BUSINESSES NOW WITH TENS OF THOUSANDS OF DEVICES. AND THE SUPPORT NEEDS THEIR ARE OF A CERTAIN KIND. YOU NEED AN ACCOUNT MANAGER. I.T. DOESN’T WANT TO HAVE A NAMELESS, FACELESS CONVERSATION JUST OVER BUSINESS CHAT. IN 24/7 TECH SUPPORT. ON-SITE HARDWARE REPAIR. AND EASY ABILITY TO SWITCH OUT DEVICES AND SO FORTH. SO WE DO HAVE A DEDICATED ENTERPRISE SERVICE OFFERING THAT HAS BEEN PRETTY WELL RECEIVED AND PART OF OUR OVERALL APPLECARE OFFERING. AND WE EVEN HAVE SOMETHING CRYPTICALLY NAMED APPLE FINANCIAL SERVICES WHICH ARE FINANCIAL SERVICES FROM APPLE. >>WHO WOULD’VE GUESSED? >>BUT THE INTERESTING THING THERE IS, THEY ARE VERY TRANSPARENT MODELS THAT LOOK AT THE COMPANY TO UNDERSTAND THE KIND OF UPGRADE CYCLES, FOR EXAMPLE, THAT THEY PREFER. AND WE ARE ABLE TO CUSTOMIZE THE FINANCIAL SERVICES MODEL TO THAT. THE OTHER — >>IS THERE A PARTNER IN THAT FINANCIAL SERVICES OFFERING QUICK >>THERE IS. THERE IS A BACKEND PARTNER WHO HELPS EXECUTE THE APPLE FINANCIAL SERVICES. BUT THE DISCUSSION IS WITH APPLE TO ESTABLISH THAT FOR AN ACCOUNT. AND IT ALSO TAKES ADVANTAGE OF SOMETHING THAT I HOPE IS NOT A WELL-KEPT SECRET, BUT WE HAVE GREAT HARDWARE RESIDUAL VALUE FOR DEVICES AND WITH HER APPLE FINANCIAL SERVICES OFFERINGS, WE ARE ABLE TO TAKE ADVANTAGE OF THAT TO MAKE THE CASH FLOW AND THE AFFORDABILITY OF THE DEVICES OVER, SAY, A 3 TO 4 YEAR TERM FOR A MACRO TO THE THREE-YEAR TERM FOR A PHONE OR iPAD, ALLOWS A BUSINESS TO TAKE ADVANTAGE OF THOSE RESIDUAL VALUES THROUGHOUT THE PROCESS. THE TERM OF THE AGREEMENT BECAUSE THAT A TWO-WAY PROGRAM? >>YOU CAN DO EITHER, YOU CAN OWN AT THE END OR REPLACE AT THE END. AS I SAID, IT IS REALLY PRETTY FLEXIBLE, AND THE IDEA IS TO MAKE IT EASY AND UNDERSCORE WAYS TO MAKE OUR PRODUCTS AFFORDABILITY MORE APPARENT FOR BUSINESSES. >>GOT IT. >>WATCH THIS SPACE. WHO KNOWS? >>OKAY. THE RIFF ON THE BUSINESS CHAT THING, A TINY BIT, THAT IS OF IS THE ONE OFFERING AND IT IS BASED ON THE BACKBONE OF THE WORK YOU’VE DONE WITH MESSAGES. I THINK A LOT OF CORPORATIONS, A LOT OF BIG COMPANIES USE MESSAGES, FACETIME AND OTHER TOOLS THAT APPLE PROVIDES AS AD HOC. APPLE USES MESSAGES INTERNALLY. >>WE DO. >>IS THERE A PATCH A GOOD SHE MORE HOLISTIC FOR A COMPANY? IT SEEMS LIKE YOU HAVE SLACKEN THESE OTHER OFFERINGS OUT THERE, BUT I KNOW PERSONALLY WE OFTEN HAVE OBSERVATION HOW MUCH WE SHARE WITH BLACK AND THAT SORT OF THING. IT SEEMS LIKE YOU CAN MAKE IT STRONG OFFERING THEIR. >>WE HAVE NOTHING TO TALK ABOUT TODAY, BUT IT IS A CASE THAT PEOPLE ARE USING THOSE, DOING THINGS LIKE EXPANDING FACETIME FOR 32 PEOPLE AT ONCE IS SOMETHING THAT A FAMILY MAY USE IF YOU HAVE A LOT OF KIDS, I ONLY HAVE THREE. >>IT IS PRETTY EXTREME. >>ALSO COULD BE GREAT FOR TEAMS COLLABORATING IN BUSINESSES. SO WE ARE MOVING SOME OF THOSE OFFERINGS TOWARDS INDOOR MAPPING, IT MAPS REAGAN HAVE NOT JUST THE SIDE OF A AIRPORT OR MALL, BUT A CAMPUS LIKE APPLE PARK. HARD TO NAVIGATE. THERE ARE A LOT OF WAYS YOU CAN IMAGINE APPLYING SERVICES TO BUSINESS TODAY. NOTHING SPECIFIC ABOUT PACKAGING THEM UP, BUT I HEAR YOU. I THINK THERE IS OPPORTUNITY FOR THESE PRODUCTS TO BE USED MORE. >>I HATE EVERY MESSENGER WE USE BESIDES MESSAGES AS A PERSONAL — >>THANK YOU. >>ABSOLUTELY. SO HISTORICALLY THE STORY OF APPLE IN THE ENTERPRISE HAS BEEN ABOUT HINGED ON THE STORY OF DYI OD. I REALLY WANT TO USE THE FOR WORK AND BRING THEM IN AND I.T. HAS TO WRAP THEIR HEADS AROUND HOW TO INCORPORATE THOSE. A LOT OF THAT WORK HAS BEEN DONE OVER THE YEARS. BUT HOW HAS ENTERPRISES APPROACH TO SELLING INTO THE CHANNEL CHANGED AS YOU START TO COME IN THE FRONT DOOR? >>WE SEE IT KIND OF IS AN EVOLUTION. IT DID START REALLY WITH iPHONE BACK IN 2007 AND WITH THE DYI OD MODEL. AND OF COURSE TRIGGERING A LOT OF THE CONSUMERIZATION OF I.T. AND YOUR TEAM HAS WRITTEN ABOUT THAT. AND I AM SURE MOST OF THE AUDIENCE IS QUITE FAMILIAR WITH THAT AS WELL. THAT WAS GREAT FOR US. IT WORKED REALLY WELL FOR US TAKING THE CONSUMERS FOR TECHNOLOGY TO BRING INTO THE BUSINESS. I WOULD SAY THERE ARE THREE PHASES. SECOND THING WAS, THE AVAILABILITY OF THE iPAD IN 2010. THE iPAD WAS AN INTERESTING TRIGGER. PEOPLE WERE ALREADY HAVING PRETTY DECENT NUMBERS OF IPHONES IN THEIR WORKPLACES. WE DID A LOT OF THE WORK FOR INTEGRATION AND SECURITY, THE BASICS TO HAVE THIS WORK. AS THE iPAD CAME OUT, IT BECAME MORE APPARENT THAT WE HAVE A LOT OF THESE DEVICES, iPAD SEEMED LIKE A GREAT BUSINESS TOOL. THERE IS A SUPER SCHOOL SDK. WHAT HAPPENED THEN WAS A LITTLE BIT MORE ATTENTION TO CORPORATE LIABLE AND TO BUILDING CUSTOM APPS FOR iPAD, BUT ALSO FOR iPHONE. AND SO, THAT WAS A LITTLE DIFFERENT, AND THAT KIND OF, BECAUSE IT WOULD BE FOR EXAMPLE FOR MAYBE IT WAS A FIELD SERVICE ORGANIZATION THAT WAS GOING TO BE USING THE DEVICES, CORPORATE LIABLE MADE SENSE. THAT THE HARDWARE WOULD BE PURCHASED AND THE PLANS WILL BE PAID FOR BY THE COMPANY. SO THAT CHANGED THE BYOD TO SOME DEGREE. WHAT WE SEE TODAY AS WE CONTINUE, OBVIOUS THE BUILDING IS CUSTOM MAPS HAPPENED ON THE APPLE MAC. PART OF THE THIRD PHASE. WHAT WE SEE AS BYOD CONTINUES TO COEXIST WITH INSTITUTIONALLY OWNED. AND A LOT OF OUR WORK HAS BEEN TRYING TO LET PEOPLE DO WHAT THEY WANT WITH THEIR DEVICE, PAYING ATTENTION TO WHO OWNS THE DEVICE. SO WE CAN TALK MORE ABOUT THAT IN A SECOND, BUT TO FINISH ANSWERING THE CORE OF YOUR QUESTION, I THINK THE THIRD PHASE WAS REALLY INTERESTING AND YET A DIFFERENT MODEL, DIFFERENT THAN BYOD AND PURELY INSTITUTIONAL OLD IT HAS TO DO WITH THE RESURGENCE OF MAC THAT IS HAPPENED WITH THE SUCCESS OF OUR IOS DEVICES OR THE ADOPTION OF IOS HALO EFFECT. IT IS NOT JUST CREATIVE DEPARTMENTS, IT IS NOT JUST THE DEVELOPERS WERE CREATING APPS FOR THESE COMPANIES, BUT IT IS USING THE PRODUCTIVITY TOOL. THE THIRD PHASE IS REALLY AROUND MAC IS A CHOICE. WE’RE SEEN BUSINESSES ARE GIVING EMPLOYEES THE OPTION FOR WHAT THEY WANT TO USE AND MAYBE MANY OF YOU ARE FAMILIAR WITH IBM, WHO WOULD NOT HAVE THOUGHT THEY WOULD HAVE ALMOST 300,000 APPLE DEVICES AT IBM, AND WILL OVER 100,000 OF THEM ARE A MAC, SIMPLY BASED ON GIVING EMPLOYEES CHOICE . IBM IS A GREAT PARTNER AND HAVE DONE GREAT STUDIES THAT SAY THREE AND FOUR EMPLOYEES GIVEN A CHOICE WILL CHOOSE A MAC. WE SEE THAT PLAYING OUT OVER AND OVER IN BUSINESSES, SAP,.THE CAUSE OF HIS THE HERE, WE JUST HEARD SOMEONE FROM SAP. HCA, A LARGE HEALTHCARE ORGANIZATION AND MANY OTHER ORGANIZATIONS. SO THAT IDEA OF DEVICES AS A CHOICE, LEADING THE INSTITUTIONALLY OWNED PERHAPS OR SUBSIDIZED, BUT LETTING THE USER PICK FROM THAT. >>LUBRICATED THE CHANNEL WITH THE USER MAKES THE CHOICE FOR THE COMPANY. SO YOU MENTIONED PERSONALLY OWNED DEVICES. I KNOW YOU HAVE A NEW TOOL FOR THAT. >>SUPER EXCITING. WE AT APPLE HAVE A BLESSING AND A BURNING, WHICH IS PEOPLE BROUGHT THESE DEVICES INTO ENTERPRISE IN THE FIRST PLACE BECAUSE THEY LOVE THEM. SO AS WE LOOK AT BUILDING CAPABILITIES TO MAKE SURE I.T. AND THE CORPORATION CAN MANAGE THOSE DEVICES APPROPRIATELY, WE WANT TO DO IT WITHOUT FICTION FOR THE I.T. FOLKS, BUT WITHOUT COMPROMISING THE END-USER EXPERIENCE. AND THAT SOUNDS REALLY EASY, BUT THOSE OF YOU WHO ARE CLOSER TO IT MAY KNOW IT IS DIFFICULT SOMETIMES TO SOLVE FOR THE VERY LEGITIMATE ISSUES AND CONCERNS AND I.T. DEPARTMENT MIGHT HAVE WITHOUT CREATING A CRIPPLING HIS PEERS WITH SOMEONE CAN’T REALLY USE iPHONE OR iPAD OR MAC. >> I USE A TON OF APPS. THEY DON’T KNOW I CAN DELETE IT. >>COME ON NOW. SO WHAT WE HAVE DONE. AND IT IS BEEN BUILDING ON, WE PUT LOTS OF ENTERPRISE FEATURES IN EVERY RELEASE SINCE 2008 QUITE HONESTLY. THE YEAR AFTER THE FIRST iPHONE SHIP THAT WE BEGAN INCORPORATING ENTERPRISE FEATURES INTO THE DEVICE AROUND SECURITY, AROUND MANAGEMENT, AROUND IDENTITY AND PRODUCTIVITY. BUT WHAT WE’VE DONE THIS YEAR THAT BUILT ON, FOR THE SAME FAMILIAR, A FILESYSTEM WE ANNOUNCED A COUPLE OF YEARS AGO WHICH ENABLES US TO CREATE VOLUMES AND OTHER GREAT CORE TECHNOLOGIES AS OF THE CALLED USER ENROLLMENT. USER ENROLLMENT IS SUPERCOOL BECAUSE IT IS MEANT FOR BYOD, WHICH AS I MENTIONED EARLIER HASN’T GONE AWAY. IT IS STILL A VIABLE WAY THAT PEOPLE ARE BRINGING TECHNOLOGY INTO BUSINESS, BUT WHEN YOU HAVE YOUR OWN DEVICE AND BRING IT INTO A COMPANY, TWO THINGS MAY HAPPEN. SOMETIMES I.T. SAYS I WANT TO MANAGER DEVICE AND THE USER SAYS BUT THIS IS MY PERSONAL DEVICE, I AM NOT GIVING YOU COMPLETE CONTROL OVER MY PASSCODE AND ALL THESE OTHER THINGS. >>ESPECIALLY, WE HAVE SOURCES AND TALK WITH THEM AND DON’T WANT TO GIVE CORPORATE ACCESS. >>THERE IS STUFF THAT IS PERSONAL. AND WE CARE ABOUT THAT A LOT. IF YOU ARE THE END-USER, YOU ALSO ARE PROBABLY THINKING I WANT TO KEEP MY DATA PRIVATE, BUT IN SOME CASES THE I.T. FOLKS ARE LIKE, >>YOU HAVE YOUR PERSONAL I.D. AND THEN A MANAGED I.D. THAT I MENTIONED EARLIER. YOU CAN EASILY CREATE MANAGED APPLE I.D.S FOR THE ORGANIZATION OR THE INDIVIDUAL BRINGING THEIR OWN PHONE. WITH THAT, WE HAVE THE ABILITY. THIS IS SIMPLIFYING IT, BUT IT IS A POWERFUL CONCEPT. WE HAVE THE ABILITY, WITHOUT CRIPPLING YOUR ACCESS TO APPS AND SERVICES FOR YOUR PERSONAL USE, GIVE YOU PROTECTED, APPROPRIATELY SANDBOXED ACCESS TO THE APPS AND SERVICES YOUR COMPANY WANTS YOU TO BE USING. >>AND THE USER EXPERIENCE IS SEAMLESS. >>IT IS SEAMLESS. I DON’T LOG OUT OF ONE I.D. AND INTO ANOTHER. WE KNOW, BASED ON THE I.D., WHAT YOU ARE DOING, WHERE YOU ARE DOING IT, THIS PARTICULAR APP IS ASSOCIATED UP HERE, BUT YOUR PHOTOS APP IS PERSONAL. I DON’T WANT MY KIDS IN MY CORPORATE CLOUD. >>SO THE BENEFIT TO USERS IS CLEAR. THEY DON’T HAVE TO CARRY TWO, ONE IN A CORPORATE CASE AND ALL THIS STUFF. >>NOBODY WANTS TO CARRY TWO POINT WE HAVE KNOWN THIS FOR A LONG TIME. THIS IS A BIG STEP FORWARD AND WE HAVE HEARD A GREAT RESPONSE FROM THOSE OF YOU WHO PLAN TO IMPLEMENT WITH IOS 13. IF YOU HAVE FEEDBACK, LET US KNOW. WE ARE HEARING GREAT RESPONSES ON THE BETA FOR HOW THIS IS HELPING ADDRESS THAT ISSUE. WE HOPE TO REMOVE ANY FRICTION, BUT RESPECT WHAT I.T. NEEDS TO DO AND WE FEEL THIS IS GREAT FOR THAT. IT IS USER ENROLLMENT, WITH IOS 13. PRETTY GREAT. >>COOL. ONE THING I WANTED TO ASK ABOUT, OVER THE LAST SEVERAL YEARS, APPLE HAS PUT MORE AND MORE FOCUS ON ON DEMAND PROCESSES. THEY HAVE THE IPHONES AND IPADS AND CUSTOM SOFTWARE TO AID IN BUILDING AND RUNNING MODELS AND THAT SORT OF THING, SO HOW IS APPLE THINKING ABOUT SELLING TO THE ENTERPRISE, THIS OPPORTUNITY TO OFFLOAD PROCESSING TO DEVICES TO REDUCE PROCESSING LOAD AT A CENTRAL UNIT AND ALSO SECURITY AND PRIVACY -WISE. >>IT SOUNDS A LOT LIKE AN EDGE COMPUTING QUESTION. >>YEAH, IT IS. >>IT IS A GREAT QUESTION AND OBVIOUSLY THERE ARE THINGS CONVERGING HERE THAT, ONCE AGAIN, POTENTIALLY A GREAT SCENARIO FOR US, FOR PEOPLE USING APPLE DEVICES. AS YOU SAID, THERE IS TREMENDOUS PROGRESS. YOU SEE DEMOS, IF ANYBODY WATCHES OUR EVENTS AT THE WORLDWIDE DEVELOPER CONFERENCE OR OTHER EVENTS. THE PROCESSING POWER OF THESE DEVICES IS DRAMATICALLY IMPROVING YEAR ON YEAR. WE ARE NOT TALKING ABOUT MOBILE CHIPS IN AN iPHONE OR iPAD, WE ARE TALKING ABOUT HARDWARE, SO I CAN. WE ARE TALKING ABOUT THE OPPORTUNITY TO BUILD THINGS INTO THE CHIPS. FOR EXAMPLE, TO WRAP BACK AROUND TO SPECIFICALLY WHAT YOU’RE ASKING ABOUT, FOR EXAMPLE, IN OUR A SERIES CHIP, WE HAVE A DEDICATED PART OF THE CHIP, PURPOSE BUILT AROUND MACHINE LEARNING. IT IS CALLED THE NEURAL ENGINE AND IT IS AN INSTRUCTION SET, OPTIMIZED TO PROCESS DATA ON YOUR DEVICE. ET CETERA. SO THAT IS AN EXAMPLE OF BRINGING THE DECISION-MAKING TO THE DEVICE. OUR MOTIVATION FOR DOING THAT, IN LARGE PART, IS PRIVACY. IF YOU WANT TO HAVE NEWS, UNDERSTAND WHAT YOU LIKE TO READ, YOU WANT SUGGESTIONS FROM THE OPERATING SYSTEM. YOU WANT TO KNOW HOW EARLY YOU NEED TO LEAVE FOR YOUR NEXT APPOINTMENT. YOU DON’T NECESSARILY WANT TO BE SHARING ALL OF THAT. THERE ARE A LOT OF THINGS THAT HAVE DRIVEN ON DEVICE PROCESSING. AT THE SAME TIME, WE ARE NOW IN A WORLD WHERE THAT KIND OF POWER AND OPPORTUNITY TO USE THESE DEVICES FOR COMPUTING, WITHOUT GOING TO A DATA CENTER OR DEDICATED SERVER IS QUITE COMPELLING. SO, WE DEFINITELY SEE ORGANIZATIONS LOOKING AT TAKING ADVANTAGE OF THE ON DEVICE PROCESSING POWER. THE VERY REAL COMPUTING POWER OF THESE DEVICES AS PART OF A SOLUTION, TOO, YOU KNOW, MAYBE THERE IS NOT BANDWIDTH. MAYBE YOU DON’T WANT TO BE SENDING STUFF UP TO THE DATA CENTERS. SO, OUR DEVICES, AS A PIECE OF EDGE COMPUTING, AS A WAY TO MANAGE HOW THAT DATA MOVES AROUND, WE THINK IS VERY POWERFUL AND WE ARE HAVING FUN AS THAT AREA CONTINUES TO GROW. LOOKING AT HOW OUR PRODUCTS CAN PLAY THERE AND WHAT MORE WE CAN AND SHOULD BE DOING, AS YOU SAID, WITH THE SOFTWARE BEYOND TO MAKE IT VIABLE FOR THE THINGS PEOPLE WANT TO DO FOR EDGE COMPUTING ON THE DEVICE, IN ADDITION TO THINGS USERS WANT TO KEEP PRIVATE ON THE DEVICE. >>SURE. JUST TO WRAP IT UP, KIND OF A PERSONAL QUESTION. WHERE DOES NETWORK FIT INTO THE ENTERPRISE STRATEGY? I THINK YOU SEE THAT AS A TOOL FOR ENTERPRISE AS A VIABLE PRODUCT — >>FIRST OF ALL, I LOVE IT, SO YOU ARE ASKING A BIASED AUDIENCE. WE DO USE THE SUITE, EVEN FOR OUR BIG EVENTS. ONE OF THE REASONS WE BEGAN DEVELOPING THE IWORKS APPS, AND KEYNOTE WAS THE FIRST, WAS BECAUSE STEVE WANTED SOMETHING GREAT TO BUILD APPLE KEYNOTES AND TO THIS DAY IT IS WHAT WE USE FOR OUR PRESENTATIONS. SO THOSE APPS, THEY ARE FREE ON YOUR DEVICES. SO THAT IS GREAT. THEY ARE COMPATIBLE, FOR EXAMPLE, WITH OFFICE. WE UNDERSTAND PEOPLE HAVE A LOT OF DOCUMENTS IN THAT FILE FORMAT AND SO FORTH. SO WE HAVE A GOOD INTERCHANGE WITH MICROSOFT OFFICE. WE THINK THE FEATURE SET, IF YOU WANT TO CREATE BRILLIANT LOOKING PRESENTATIONS. MAYBE MY IDEAS ARE SO-SO, BUT MY SLIDES ARE KILLER. IF YOU WANT TO CREATE BEAUTIFUL DOCUMENTS THAT STAND OUT IN KEYNOTE AND EVEN IN THE SPREADSHEET APP, WHERE IT IS A CANVAS WHERE YOU CAN VISUALIZE DATA IN INCREDIBLY CREATIVE WAYS THAT IS NOT JUST A SPREADSHEET. IS IT FOR EVERYONE? IT MAY NOT BE FOR EVERYONE, BUT WE DO SEE SMALL AND MEDIUM BUSINESSES ADOPTING IWORK AND LARGE BUSINESSES SAY, IT IS BUILT IN, LET’S TAKE A LOOK. KEYNOTE IN PARTICULAR. PAGES AND NUMBERS, AS WELL. WE HAVE DONE SOME THINGS TO MAKE IT, I THINK, MORE USEFUL AND ATTRACTIVE, WHICH WE HAVE ALSO ADDED TWO OTHER APPS. COLLABORATION FEATURES. IT IS SOMETHING GOOGLE HAS DONE A GREAT JOB AT POINT COLLABORATION FIRST, AND WE BELIEVE THAT IS IMPORTANT. >>IT IS THE ADVANTAGE — >>RIGHT, AND WHEN YOU HAVE SOMETHING LIKE KEYNOTE, WHERE WE HAVE THESE BIG, COMPLEX SLIDES AND THEY ARE BIG, HOW DO YOU COLLABORATE SEAMLESSLY? SO WE HAVE HARD PROBLEMS TO SOLVE, BUT WE ARE IN A PRETTY GREAT PLACE WITH THAT. COLLABORATION IN IWORK AND ALSO THINGS LIKE NOTES AND REMINDERS, BECAUSE I THINK OVERALL FOR PRODUCTIVITY IN THE ENTERPRISE YOU WANT THAT. SO I THINK IT HAS A PLACE. IS IT FOR EVERYONE? NO, BUT PEOPLE WHO USE IT ABSOLUTELY LOVE IT. IF YOU HAVEN’T TRIED IT, TRIED IT. >>EXCELLENT. THANKS. WE ARE OVER TIME AND THEY STAY BECAUSE THEY CAN’T GET ENOUGH. THANK YOU. >>THANK YOU VERY MUCH. >>>HI AGAIN, EVERYONE. IT LOOKS LIKE YOU KNOW WE ARE TAKING A SHORT BREAK ON THIS STAGE. WE DO HAVE A BREAKOUT SESSION ABOUT TO START ON THE SECOND FLOOR OF THE FORUM. IF YOU WANT TO ASK QUESTIONS, USE SLIDO AND THE CODE TC ENTERPRISE, OTHERWISE I THINK YOU NEED TO BE BACK HERE BY 11:15, PROBABLY. THANKS. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪>>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS. THE PROGRAM IS ABOUT TO BEGIN. >>>LADIES AND GENTLEMEN, PLEASE WELCOME BACK TO THE STAGE, TECHCRUNCH SILICON VALLEY EDITOR AND ENTERPRISE MC, CONNIE LOIZOS. >>YOU ARE BACK. WE KNOW MOST OF YOU DIDN’T GO ANYWHERE AND WE DIDN’T EITHER. WE ARE EXCITED TO WELCOME TO THE STAGE, AARON LEVIE, CEO OF BOX, WITH OUR TERRIFIC ENTERPRISE REPORTER, RON MILLER.>>WELCOME. >>COOL, THANKS FOR HAVING ME. >>YEAH, USUALLY I DO AN INTRO BUT I THINK EVERYONE KNOWS WHO THIS GUY IS AT THIS POINT. >>WE WILL TEST THAT THEORY. >>ALL RIGHT, SO LET’S GET INTO IT. THIS WEEK, INTERESTING TIMING. >>WE WANTED TO MAKE SURE YOU HAVE NEWS TO COVER. >>A COMPANY CALLED STARTUP VALUE, AND ACTIVIST INVESTOR, BUT A 7 1/2% STAKE IN YOUR COMPANY. I THINK YOU ARE AWARE OF THAT. >>ACTUALLY, THAT IS NEWS, I MIGHT NEED TO GO — >>CHECK THAT OUT. >>I WILL CHECK OUT THE ARTICLE.>>WHAT WAS YOUR REACTION WHEN YOU HEARD ABOUT THAT? COMING ON BOARD? >>I THINK BY VIRTUE OF BEING PUBLIC, WE HAVE LOTS OF DIFFERENT TYPES OF INVESTORS. SOME HAVE DIFFERENT LEVELS OF ORGANIZATION AROUND WHY THEY INVEST AND WHAT THEY SEE AS THE OPPORTUNITY. I THINK WITH THEM THERE IS A BELIEF WE ARE UNDERVALUED RIGHT NOW AND THERE IS AN OPPORTUNITY TO GROW THAT VALUE. WHAT WE HAVE FOCUSED ON AND TOLD WALL STREET AND INDICATED TO STARBOARD AND OTHERS IS WE ARE INTERESTED IN ACCELERATING OUR GROWTH RATE, AS WELL AS DRIVING GREATER PROFITABILITY. WITH ANY INVESTOR, THAT IS WHAT WE TEND TO BE VERY FOCUSED ON AND WORKING ON WITH THEM. >>SO WHY DO YOU THINK YOU ARE SO UNDERVALUED? >>WELL, I THINK WE HAVE GONE THROUGH THIS TRANSITION AS A COMPANY WHERE WE WENT FROM BEING A SINGLE PRODUCT COMPANY TO A MULTI PRODUCT COMPANY IN JUST THE PAST COUPLE OF YEARS. AS WE MADE THAT TRANSITION, THIS HAS CAUSED AN EVOLUTION IN BOTH HOW WE SELL OUR PRODUCT AND HOW WE BRING OUR PRODUCT AND PLATFORM TO MARKET, AS WELL AS, FRANKLY, WHAT WE ARE BUILDING AND HOW WE ADVANCE OUR PLATFORM. JUST TO GIVE YOU THE SCALE OF BUSINESS, SOME OF THAT HAS DRIVEN A LOWER GROWTH RATE BECAUSE THE NUMBERS ARE SO MUCH LARGER, BUT WE ARE INTERESTED IN ACCELERATING THAT GROWTH, DUE TO OUR NEW PRODUCTS AND THE WAY WE ARE SELLING THE PLATFORM NOW. >>WHEN YOU HAVE AN INVESTOR OF THIS TYPE COME ON BOARD, AND BUILD THIS COMPANY FROM THE GROUND UP, YOU HAVE THE QUINTESSENTIAL DORM ROOM ORIGIN STORY, RIGHT? DO YOU WORRY ABOUT LOSING CONTROL OF THE COMPANY AT THIS POINT, BECAUSE OF A BIGGER COMPANY LIKE THIS COMING AND TRYING TO MAKE THINGS HAPPEN? >>I THINK AS A PUBLIC COMPANY, WHAT YOU TRADE FROM GOING FROM PRIVATE TO BEING PUBLIC, IS YOU HAVE A WAY LARGER INVESTOR BASE AND IT IS THEIR RIGHT, AND FRANKLY IN SOME CASES, RESPONSIBILITY, TO MAKE SURE THEY ARE ACTIVELY ENGAGED IN THE COMPANY. WE ARE FOCUSED ON BUILDING OUT THE BUSINESS FOR THE LONG RUN AND AS WE ALWAYS DO WITH INVESTORS, WE GET LOTS OF FEEDBACK. WE COMMUNICATE OUR STRATEGY WITH THEM AND IN SOME CASES THOSE INVESTORS MAY BE MORE ENGAGED AND ACTIVE IN TERMS OF WORKING WITH US AND, YOU KNOW, TRYING TO GET CLOSER TO THE BUSINESS. THAT IS SOMETHING WE TOTALLY SUPPORT. WE ARE SUPER FOCUSED ON THE LONG RUN AND ULTIMATELY THIS COMES DOWN TO THE STRATEGY OF MAKING SURE WE ARE BUILDING OUT OUR PLATFORM AND GOING INTO LARGER AND LARGER ENTERPRISES. WE HAVE 94,000 CUSTOMERS ON THE PLATFORM. NEARLY 1000 CUSTOMERS PAYING OVER $100,000 A YEAR. THE FOCUS IS HOW DO WE CONTINUE TO GROW THAT NUMBER AS SIGNIFICANTLY AS POSSIBLE. THAT IS WHAT INVESTORS WANT AND WHAT WE WANT INTERNALLY AS AN ORGANIZATION. >>RIGHT, AND WHAT DO YOU THINK WILL HAPPEN NEXT, NOW THAT YOU HAVE THIS TYPE OF ACTIVIST INVESTOR INVOLVED? THEY MADE IT IN THEIR STATEMENT CLEAR THAT THEY WANT TO MAKE CHANGES AND DO THINGS. WHAT YOU THINK WILL BE THE RESULT OF THAT? >>I THINK IN THEIR STATEMENT THEY REALLY IDENTIFIED THAT THEY THINK THERE IS UPSIDE IN THE STOCK. IT IS STILL VERY EARLY IN THE CONVERSATION AND PROCESS, BUT WE ARE COLLABORATIVE IN THESE SITUATIONS. WE WANT TO WORK WITH ALL OF OUR INVESTORS AND I THINK IT WILL BE THE SAME HERE. >>WHAT LED TO THIS, YOU ENDED — WE HAD A CONVERSATION A COUPLE YEARS AGO WHERE THERE WAS A STORY IN THE WALL STREET JOURNAL, THE PEOPLE WERE SAYING THERE WOULD BE A HOSTILE TAKEOVER. YOU SAID WE CAN DO THAT. NOW YOU HAVE ELIMINATED DUO CLUSTERS, WHICH A LOT OF PEOPLE THINK WAS THE RIGHT THING TO DO. DO YOU HAVE ANY REGRETS IN LIGHT OF THIS INVESTMENT? >>IF I DID, I PROBABLY WOULDN’T SAY IT ON THE STAGE. IN GENERAL, AS YOU GO PUBLIC, YOU MAKE THAT TRADE WHERE YOU ARE NO LONGER A COMPANY RUN BY A RELATIVELY SMALL BOARD AND A COUPLE INDIVIDUALS. ULTIMATELY, YOU HAVE TO TAKE RESPONSIBILITY FOR SHAREHOLDER VALUE AND GROWING SHAREHOLDER VALUE. IN THAT CASE, WE WORK WITH ALL OF OUR INVESTORS TO DO SO. I THINK THE DUAL CLASS THING IS A BIT OF A DISTRACTION. I THINK ULTIMATELY, AGAIN, IT IS MY JOB AS CEO AND OUR JOB AS AN ORGANIZATION TO MAKE SURE WE ARE GROWING THE BUSINESS, GENERATING RETURNS FOR SHAREHOLDERS. ULTIMATELY THIS GOES BACK TO WHAT ARE WE DOING AS A COMPANY, WHAT IS OUR STRATEGY AND HOW ARE WE HELPING CUSTOMERS? AND THAT IS WHAT WE ARE FOCUSED ON. >>SPEAKING OF STRATEGY, INVESTORS SEEM TO HAVE A PROBLEM UNDERSTANDING WHAT IT IS THAT YOU DO. MAYBE THAT IS ONE OF THE REASONS IT IS UNDERVALUED AND VOLATILE, IN TERMS OF THE STOCK. WHY DO YOU THINK THAT IS? WHY DO YOU THINK THERE IS SO MUCH TROUBLE UNDERSTANDING WHAT BOX DOES? >>IT IS A PRETTY COMPLICATED MARKET. UNLIKE CATEGORIES LIKE CRM OR HUMAN CAPITAL MANAGEMENT, KNOWN CATEGORIES. KNOWN INVESTMENT MARKETS. AS CLOUD DISRUPTORS WENT AFTER THOSE MARKETS, WORKDAY, SALESFORCE, SERVICENOW, EACH DISRUPTING THEIR CATEGORY WHERE THEY ARE BUILDING A MORE DISRUPTIVE VERSION OF THAT. WE ARE ACTUALLY REALLY DISRUPTING A SET OF CATEGORIES AND TECHNOLOGY. STORAGE, CONTENT MANAGEMENT AND COLLABORATION SOFTWARE AND THE SECURITY AROUND THAT. ULTIMATELY IT IS A PRETTY DIFFERENT PROPOSITION THAN SOME OF THE MODELS WE HAVE SEEN. IT MEANS THERE IS MORE EDUCATION FOR INVESTORS. MORE WORK THAT WE HAVE TO DO AS A PLATFORM, WHICH IN SOME CASES HAS CAUSED US TO INVEST MORE AGGRESSIVELY IN R&D OR SALES MARKETING, EARLIER IN OUR GROWTH TRAJECTORY. OFTENTIMES THAT IS PERCEIVED AS CONFUSING MORE LESS EFFICIENT TO THE BROAD INVESTOR POPULATION. WE ARE GOING AFTER A $40 BILLION MARKET, WHEN YOU LOOK AT THE TOTAL SPEND. ANYTHING WHERE AN ENTERPRISE NEEDS TO SCORE OR SECURE OR MANAGE INFORMATION. DOCUMENTS, FILES, CRITICAL DATA THAT GOES INTO THE BUSINESS. WE ARE BUILDING A PLATFORM FOR SOLVING THOSE CHALLENGES AND IT IS ONE PART SECURITY, ONE PART WORKFLOW, ONE PART COLLABORATION. IT IS DISRUPTING A FEW INDUSTRIES ALL IN ONE MARKET, SO THAT IS SOMETHING THAT FRANKLY WE HAVE TO CONTINUE TO DO A BETTER JOB IN MAKING SURE WE EDUCATE THE MARKET, BUT FRANKLY AGAIN, OUR FOCUS AS A COMPANY AND FOR ANY STARTUP, IT IS 100% ABOUT CUSTOMERS AND MAKING SURE ULTIMATELY THAT IS WHAT WE ARE DRIVING OUR ATTENTION TOWARD .95 THOUSAND CUSTOMERS. 65% OF THE FORTUNE 500. WE THINK IT IS THE SORT OF PROOF THAT THIS MODEL IS WORKING. >>AND THAT MESSAGE SHOULD BE GETTING THROUGH, BUT IT DOESN’T SEEM TO GET THROUGH. YOU’VE HAD MORE THAN A DECADE TO EXPLAIN IT TO PEOPLE. >>I AM A PRETTY SLOW TALKER, SO I CAN TAKE A LITTLE WHILE TO GET ACROSS. >>YOU KNOW, WHEN YOU EXPLAIN IT HERE, I’M SURE PEOPLE UNDERSTAND WHAT YOU ARE SAYING. WHY DO YOU THINK THE AVERAGE INVESTOR — >>WILL I DON’T KNOW THAT THE CENTER OF SAN FRANCISCO IS REPRESENTATIVE OF THE GLOBAL DEMOGRAPHIC OF OUR KIND OF CUSTOMER, INVESTOR BASE. I THINK LIKE ANY MARKET, YOU KNOW, DIFFERENT MARKETS NEED DIFFERENT LEVELS OF TIME TO CONTINUE TO BE WELL UNDERSTOOD. AGAIN, WE HAVE THE BENEFIT OF, WE STARTED THE COMPANY IN OUR SOPHOMORE YEAR OF COLLEGE AND WHAT WE WANTED TO DO WAS SOLVE A REALLY BIG PROBLEM. WE HAVE ALWAYS BEEN INCREDIBLY FOCUSED ON THAT IN THE LONG RUN. NEAR TERM, WHEN OUR STOCK MIGHT BE DOWN OR UP, I THINK IT IS MORE — YOU KNOW, WE DEEPLY CARE ABOUT WHAT SHAREHOLDERS ARE EXPERIENCING, BUT ULTIMATELY WE CARE MORE ABOUT, ARE WE BUILDING A BUSINESS THAT WILL BE SUSTAINABLE AND IMPACTFUL FOR HOW THE WORLD WORKS AND OUR CUSTOMERS? SO THAT IS ULTIMATELY THE FOCUS WE HAVE. >>OKAY, LAST MONEY QUESTION. >>WE CAN KEEP GOING. >>AND WE WILL. SO YOUR STOCK, SINCE MAY, IT WAS UP 24, 28 — >>I THINK WE ARE DOING A LITTLE BETTER TODAY. OKAY, MAYBE THAT WAS A WEEK AGO.>>YOU KNOW, WHEN YOU LOOK AT THE GRAPH OF YOUR STOCK, WHY DO YOU THINK IT HAS BEEN SO VOLATILE? >>IT IS LIKE THE GRAPH OF MY HEART RATE. I THINK, AGAIN, ANY COMPANY THAT IS SORT OF A LITTLE BIT SMALLER, IS GOING TO DEAL WITH A BIT MORE VOLATILITY. THIS IS SORT OF TRUE OF THE BROADER SAAS ENVIRONMENT. THERE WILL ALWAYS BE FLUCTUATIONS IN THE MARKET WITH PEOPLE PULLING MONEY OUT AND PUTTING MONEY IN. WE DEAL WITH THAT, LIKE ANY OTHER COMPANY DOES. AGAIN, FOR ANY COMPANY GOING PUBLIC OR ANY COMPANY ALREADY PUBLIC, WE HAVE TO BE FOCUSED ON THE LONG RUN AND THAT IS ALL YOU CAN DO. THAT’S WHAT YOU CONTROL, SO THAT IS WHERE WE ARE PUTTING OUR ATTENTION. >>AND SAAS COMPANIES, DO YOU THINK IN GENERAL WALL STREET HAS A PROBLEM UNDERSTANDING THE VALUE PROPOSITION OF SAAS? IT SEEMS LIKE THE STOCKS, YOU HAVE A DECENT EARNING REPORT AND THE STOCK DROPS AND THEY NEVER UNDERSTAND THAT, YOU KNOW? >>ACTUALLY THINK WALL STREET IS DEFINITELY GETTING VERY GOOD AT UNDERSTANDING THE SAAS BUSINESS MODEL. THE BENEFIT FOR ENTREPRENEURS, RUNNING THESE BUSINESSES, AND TO INVESTORS, YOU HAVE A HIGH DEGREE OF PREDICTABILITY. IT IS AN EFFICIENT MODEL ONCE YOU GET TO SCALE. I THINK INVESTORS APPRECIATE THAT. WE ARE SEEING COMPANIES THAT SCALE LIKE SALESFORCE AND OTHERS , WHERE YOU HAVE REALLY HEALTHY OPERATING MARGINS. REALLY, YOU KNOW, SIGNIFICANT PROFIT GENERATION, AS WELL AS HIGH GROWTH. I THINK THAT IS A MODEL WALL STREET IS APPRECIATING AND UNDERSTANDING AND I THINK THE PRIVATE SECTOR, PRIVATE INVESTORS, ARE EQUALLY BETTING ON THESE BUSINESSES. WHEN I LOOK AT THE CROP OF IPOS THAT HAS RECENTLY COME OUT OR THE COMPANIES WE ARE SEEING BEING FUNDED, IT IS AN INCREDIBLY EXCITING TIME TO BE IN SAAS AND ENTERPRISE. >>SWITCHING GEARS, I KNOW THAT SECURITY IS SOMETHING WE REALLY CONCENTRATE ON. THIS YEAR, TECHCRUNCH REPORTED THAT USERS HAD INADVERTENTLY EXPOSED PRIVATE DATA. AS THE CEO, HOW DID YOU DEAL WITH IT WHEN IT HAPPENED? >>SO THIS WAS A SUPER IMPORTANT MOMENT FOR US AS A COMPANY, BECAUSE WE DEVELOPED A FEATURE THAT LET CUSTOMERS PUBLICLY SHARE DATA. YOU COULD IMAGINE A CAR COMPANY THAT WANTS TO BE ABLE TO PUBLISH PRESS RELEASES OR PUBLISH MARKETING CONTENT, SO MEDIA OR PARTNERS CAN ACCESS THAT CONTENT. SO COMPANIES COULD ACCESS THAT DATA. INADVERTENTLY, SOME OTHER USERS HAD CREATED THOSE EFFECTIVELY PUBLIC SITES FOR SHARING DATA AND IN SOME CASES DATA WAS EXPOSED MORE THAN THE CUSTOMER ULTIMATELY INTENDED. FRANKLY, PART OF THAT WAS ON US, WHERE WE HAD A USABILITY CHALLENGE WITH THE FEATURE. WE DIDN’T MAKE IT AS EXPLICIT AS WE COULD TO MAKE SURE ONLY THE EXACT USE CASES WERE BEING LEVERAGED FOR THIS TYPE OF FEATURE. AND OF COURSE, SOME OF IT IS ON THE EDUCATION FOR OUR CUSTOMERS. WE RESPONDED QUICKLY THROUGH A VARIETY OF SECURITY MEASURES. WE IMPLEMENTED FIVE OR SIX DIFFERENT CONTROLS IN THE PRODUCT TO PREVENT THIS IN THE FUTURE, BUT ALSO, YOU KNOW, MAKING SURE WE GO COMMUNICATE WITH CUSTOMERS THAT MAY HAVE HAD THAT TYPE OF ACCIDENTAL, OPEN SHARING OF DATA. A REALLY GREAT REMINDER AGAIN. ANY PRODUCT DEVELOPER, YOU ALWAYS HAVE TO BALANCE SECURITY AND USER EXPERIENCE AND THAT IS WHAT WE HAVE ALWAYS DONE AS A COMPANY, BUT EVEN MORE SO IN THIS CASE WE LEARNED WE HAD MORE WORK TO DO. >>SO THIS IS A CASE OF UNINTENDED CONSEQUENCES. YOU GIVE CUSTOMERS SOMETHING THEY’VE ASKED FOR AND THEN SOMETHING HAPPENS. >>IT WAS A LITTLE BIT TOO POWERFUL OF A FEATURE. WE TURNED IT BACK TO MAKE SURE IT WAS REALLY ADDRESSING THE VERY APPROPRIATE USE CASES IT WAS INTENDED FOR. >>AND WHAT DID YOU LEARN FROM THAT PROCESS? YOU HAD THIS UNINTENDED CONSEQUENCE. >>I THINK MORE BROADLY, THIS IS WHAT WE ARE SEEING GENERALLY IN SAAS RIGHT NOW. THIS IS SOMETHING THAT HAS ALWAYS BEEN PART OF OUR DNA. SECURITY IS YOUR RESPONSIBILITY, AS A BUILDER OF CLOUD PLATFORMS. YOU KNOW, WE ARE PAST THE ERA OF HAVING SECURITY BE THE RESPONSIBILITY OF THE CUSTOMER, WHERE THEY HAVE TO GO BY BOLT ON SECURITY SOLUTIONS AND SOLVE SECURITY ON THEIR OWN. IF YOU HAVE A PRODUCT THAT ENABLES THE SHARING AND MANAGEMENT OF DATA, WHICH BY DEFINITION IS ALMOST ALL SAAS PRODUCTS, THEN TAKING CONTROL OF THAT SECURITY IS INCREDIBLY IMPORTANT. FOR US, WE FOCUS ON HOW DO WE MAKE SURE THE INFRASTRUCTURE ITSELF IS SECURE, HOW DO WE MAKE SURE THE DATA IS SECURE? HOW DO WE MAKE SURE SOFTWARE DEVELOPMENT PRACTICES ARE SECURE AND ULTIMATELY HOW DO WE MAKE SURE THAT CUSTOMERS CAN LEVERAGE AND STAY SECURE. WE LAUNCHED BOX SHIELD, WHICH EFFECTIVELY BRINGS INTELLIGENT THREAT DETECTION AND DATA CLASSIFICATION TO OUR PRODUCT. AGAIN, NATIVELY INTEGRATED SECURITY BUILT RIGHT INTO BOX THAT CAN HELP CUSTOMERS WITH THESE TYPES OF EVENTS AND OTHER SECURITY CHALLENGES THEY ARE EXPERIENCING. >>RIGHT. YOU ONCE TOLD ME, WE HAVE HAD A LOT OF CONVERSATIONS OVER THE YEARS, BUT YOU ONCE TOLD ME — >>I APPRECIATE THAT YOU ARE INTERESTED IN ENTERPRISE SOFTWARE. >>YOU TOLD ME THAT YOU ALWAYS HAD A PREMIUM BOX. THE PREMIUM MODEL HELPED BUILD YOU TO SCALE AND USED THAT TROJAN HORSE TO GET INSIDE COMPANIES. WHEN YOU ADVISE STARTUPS TODAY, DO YOU ADVISE THEM TO USE THAT MODEL? >>I THINK IT IS REALLY IMPORTANT THAT YOU POINT AT THE RIGHT TYPES OF BUSINESSES OR PROBLEMS. THE WAY I THINK OF IT IS IF YOU HAVE A BROAD, HORIZONTAL PRODUCT WHERE DISTRIBUTION IS BASICALLY THE PRIMARY CHALLENGE, WHERE THERE IS AN UNLIMITED AMOUNT OF TOTAL MARKET ADJUSTMENT AND UNLIMITED DEMAND THAT YOU ARE TRYING TO SERVE THAT DEMAND AS EFFICIENTLY AS POSSIBLE, THEN OFTEN, HAVING A FREE VERSION OR A LIGHTWEIGHT TRIAL VERSION OF YOUR PRODUCT, IS REALLY IMPORTANT. IF INSTEAD YOU HAVE A PRODUCT GOING AFTER A RELATIVELY SMALL NICHE, WHERE, IN FACT, IT IS A VERY TARGETED AUDIENCE. IT IS MORE ADDRESSABLE THROUGH ADJUSTED DIRECT SALES FORCE, THAN ACTUALLY, FREEMIUM MIGHT NOT BE AS IMPORTANT. FOR US, WHEN WE THINK ABOUT SOFTWARE THAT MAKES IT EASIER TO COLLABORATE AND SHARE DATA SECURELY, WHICH IS WHAT BOX DOES, THEN BILLIONS OF PEOPLE GLOBALLY CAN BE BENEFITING FROM THAT PRODUCT. WHAT WE WANTED TO DO IS MAKE SURE WE DIDN’T CREATE ANY FRICTION FOR END-USERS WITHIN ORGANIZATIONS TO START USE BOX, BUT EQUALLY, MAKE SURE WE HAD A BUSINESS MODEL WHERE AS YOU USE BOX EXTENSIVELY, WE COULD HELP CUSTOMERS GET MORE VALUE. THAT IS ENTERPRISE FEATURES, SECURITY FEATURES, WORKFLOW TECHNOLOGY. FOR US IT HAS BEEN A BALANCE WHICH IS, BUILD DELIGHTFUL SOFTWARE FOR END-USERS SO THEY CAN ADOPT BOX AND SHARE THE PRODUCT AS VIRALLY AS POSSIBLE, WHILE SIMULTANEOUSLY MAKING SURE YOU GENERATE ENOUGH VALUE FOR THE ENTERPRISE WHERE THEY WANT TO PAY FOR ADDED SERVICES. THIS IS EFFECTIVELY THE EVOLUTION OF THE COMPANY WE ARE GOING THROUGH RIGHT NOW, WHERE INSTEAD OF ONE PRODUCT, CUSTOMERS CAN UPGRADE, OUR CORE ENTERPRISE PLAN. HOW DO WE HELP THEM HAVE ADDITIONAL SERVICES AND CAPABILITIES AND PULL THAT ALL TOGETHER, AS ONE SOLUTION FOR OUR CUSTOMERS, WHICH IS WHERE WE HAVE OUR STRATEGY TODAY IN TERMS OF SELLING THE FULL SUITE OF CAPABILITIES FOR BOX. >>NOT THAT VERY MANY ENTERPRISE SAAS COMPANIES HAVE CRACKED $1 BILLION IN SALES. YOUR LIKE THE GOLD STANDARD. AROUND $700 MILLION NOW, WHICH IS NOTHING TO SNEEZE AT. DID YOU THINK IT WOULD TAKE THIS LONG TO GET TO $1 BILLION? >>I WOULD SAY, WE GUIDED TO THIS YEAR TO A LITTLE UNDER $700 MILLION IN REVENUE. WE ARE FIRMLY ON THE PATH TO $1 BILLION IN REVENUE IN THE NEXT FEW YEARS. THERE REMAINS AN IMPORTANT MILESTONE ON THE JOURNEY. IT IS NOT THE ONLY FOCUS OF THE COMPANY. THE CORE FOCUS IS TO GROW IN A SUSTAINABLE WAY AND SERVE CUSTOMERS, YOU KNOW, WITH A HIGH DEGREE OF SUCCESS FOR OUR CUSTOMERS. $1 BILLION IN REVENUE IS A GREAT MILESTONE. SOMETHING ANY COMPANY WOULD WANT TO CELEBRATE, BUT, YEAH, THAT IS WHAT WE ARE FOCUSED ON GETTING TO EVENTUALLY IN THE NEXT FEW YEARS AND WE WOULD LIKE TO GET THERE AS QUICK AS POSSIBLE. >>WHAT YOU THINK IT TAKES TO GET THERE? >>ULTIMATELY, IT COMES DOWN TO BEING THAT SIMPLE. WE HAVE TO SELL OUR SOFTWARE TO MORE CUSTOMERS GLOBALLY. WHEN YOU LOOK AT THE PENETRATION, WHICH YOU ARE SEEING, WHY I GET EXCITED WITH IPOS LIKE ZOOM AND SLAP AND OTHERS, AND I THINK THIS IS COLLECTIVELY IMPORTANT FOR US IN THE SOFTWARE INDUSTRY, IF YOU GO BACK 10, 15, 20 YEARS, AND YOU LOOK AT THE TOTAL ADJUSTMENT MARKET FOR TRADITIONAL ENTERPRISE SOFTWARE, IT WAS BASICALLY ONLY THE WORLD’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’S GIVE AARON A HAND. >>THANK YOU. >>THANKS, AARON. GREAT TALK. >>>AND NOW, PLEASE HELP ME IN WELCOMING TO THE STAGE, MARK RUSSINOVICH, FROM MICROSOFT AZURE. >>ALL RIGHT. THANK YOU FOR BEING HERE. >>THANKS FOR INVITING ME. >>YOU JUST GOT MARRIED THIS WEEKEND. >>THAT’S RIGHT, LAST FRIDAY. >>THIS IS YOUR HONEYMOON. >>THAT’S RIGHT. >>THANK YOU. ARE YOU GOING ON A HONEYMOON? >>EVENTUALLY, IN EARLY JANUARY, WHEN THE WEATHER IS NICER IN OTHER PARTS OF THE WORLD. >>AND HERE I THOUGHT YOU WERE COMING TO US. YOU HAVE BEEN THE CEO OF AZURE FOR JUST ABOUT 10 YEARS. >>I STARTED IN 2010, SO NINE YEARS. >>AND CEO FOR FIVE YEARS. A LOT IS CHANGED IN THOSE LAST FIVE YEARS. WHAT HAS CHANGED? >>A LOT HAS CHANGED. ONE THING, CLOUD IS NOT A QUESTION LIKE IT WAS, STILL, FIVE YEARS AGO. A LOT OF COMPANIES VIEW IT AS A DONE DEAL AT THIS POINT. AZURE IS LARGER THAN IT WAS FIVE YEARS AGO. >>WHEN YOU SAY LARGER, YOU MEAN FOOTPRINT? >>NUMBER OF REGIONS, NUMBER OF SERVICES, NUMBER OF PEOPLE WORKING ON AZURE. >>YOU SAY MORE ENTERPRISES ARE MOVING TO THE CLOUD NOW. WHAT WAS IT LIKE FIVE YEARS AGO?>>SO, IT HAS BEEN FASCINATING TO WATCH HOW ENTERPRISE LOOKED AT CLOUD, FROM BACK WHEN I FIRST GOT INVOLVED. BACK THEN IT WAS SHADOW I.T. AND THERE WERE A FEW COMPANIES, BUT LARGELY, ENTERPRISE WAS NOT REALLY AWARE. I KIND OF SAW ENTERPRISE GET INTERESTED IN WHAT IS THIS CLOUD THING, WHAT ARE MY PEOPLE DOING WITH SHADOW I.T. I WANT TO DO BETTER UNDERSTAND. THEN I SAW THE FIRST WAVE OF ENTERPRISE, STARTING TO SAY, HEY, WE WILL GO TO THE CLOUD. THEN SOME TIME PASSED AND I SAW A SECOND WAVE OF ADOPTERS THAT HAD KIND OF NOT BEEN PAYING ATTENTION, HAD NOT DONE AS MUCH THROUGH THAT FIRST WAVE, THIS WAS THREE YEARS AGO. I SAW THAT WAVE OF ADOPTION HAPPEN AND IT WAS AT THAT POINT A LOT OF COMPANIES WATCHING FROM THE SIDELINES SAW THAT THE CLOUD IT GOT MATURE ENOUGH IN TERMS OF CAPABILITY AND SECURITY AND RELIABILITY, THAT THEY COULD START LOOKING AT MOVING TO IT. NOW WHAT I AM SEEING IS YET ANOTHER WAVE. THIS IS KIND OF THE BULK OF I.T. THE BULK OF ENTERPRISE IS NOW LOOKING AT HOW TO GET TO THE CLOUD. >>IS IT A SURPRISE TO YOU, HOW LONG IT HAS TAKEN? >>A LITTLE BIT. I THOUGHT IT WOULD GO FASTER, BUT I THINK IT HAS KIND OF GONE AS FAST AS I THINK THE SYSTEM CAN SUPPORT IT GOING. IF I TAKE A LOOK AT JUST AZURE, KEEPING UP WITH THIS GROWTH, WE HAVE BEEN GROWING AS FAST AS WE POSSIBLY CAN AND IT IS BARELY KEEPING UP WITH THE DEMAND WE ARE SEEING, SO IN SOME WAYS WE ARE FORTUNATE IT HASN’T BEEN FASTER. >>CAN’T YOU JUST BUY MORE SERVERS? >>WE ARE BUYING AND BUILDING AS FAST AS WE CAN. >>BUT THEY AREN’T MAKING ENOUGH FOR YOU? >>THERE IS A LOT OF COMPLEXITY. SYSTEMS, PROCESSES. A LOT OF MATURITY HAS TO HAPPEN TO RUN AT THAT KIND OF SCALE AND TO GET THE EFFICIENCY TO BUILD OUT, WHEN YOU’RE DOUBLING CAPACITY. ONE TIME, THEN DOUBLING IT AGAIN THE NEXT TIME. THE SYSTEM HAS TO IMPROVE TO BE ABLE TO DO THAT. IT IS ALL OF THAT KIND OF GROWTH OF THE INFRASTRUCTURE, PROCESSES, TOOLS AND PEOPLE, THAT HAD TO HAPPEN. >>TOTALLY. FIVE YEARS AGO, WHAT WERE THE STUMBLING BLOCKS FOR THOSE COMPANIES THAT MAY BE WANTED TO BE PART OF THAT FIRST WAVE, BUT JUST COULDN’T DO IT? >>I THINK A BIG ONE IS SKILLS. SKILLS AND CULTURE AT THE COMPANIES. I DEFINITELY SEE THIS STRUGGLE STILL PLAYING OUT WITHIN ENTERPRISE. SOME ENTERPRISE ORGANIZATIONS WHERE YOU HAVE AN I.T. DEPARTMENT THAT IS BUILT IN AN ON PREMISES ENVIRONMENT. THEY ARE PROUD, HAVE INVESTED A LOT. PEOPLE HAVE RISEN IN THE COMPANIES MADE THEIR CAREERS ON IT AND NOW THEY ARE SAYING, THERE IS PRESSURE TO GO TO THE CLOUD. THERE IS SOME RESISTANCE, NATURALLY. IN TERMS OF, WHAT WE’VE GOT IS WORKING GREAT. WHAT IS THAT GOING TO DO FOR ME? THERE IS RESISTANCE IN THE NATURALLY THIS IS WHAT I’M USED TO DOING AND I WANT TO KEEP DOING IT THIS WAY. ONCE THEY DECIDE TO MAKE THAT MOVE, JUST FIGURING OUT HOW TO DO IT. HOW DO I OPERATE THE CLOUD? WHAT KIND OF SKILLS? THE PEOPLE RUNNING PHYSICAL NETWORKS ON PREMISES, WHAT DO THEY DO WHEN IT COMES TO CLOUD SOFTWARE DEFINED NETWORKS? I AM NOT GOING AROUND AND PATCHING DATABASES ANYMORE, SO WHAT DO I HAVE TO DO WHEN IT COMES TO MANNING A DATABASE SERVICE? IT IS A LOT OF THAT. ENTERPRISE DEVELOPERS, TOO. A LOT OF RESCALING THAT HAS TO HAPPEN AND A SWITCH TO A DEVOPS MENTALITY. >>SURE, IS THAT SOMETHING THAT HAPPENED INSIDE OF MICROSOFT, AS WELL? >>ABSOLUTELY AND THAT IS RELATED TO THE KIND OF TRANSFORMATION. WHILE WE WERE GROWING, WE ARE ALSO GROWING THAT TRANSFORMATION FROM A BOX PRODUCT COMPANY INTO A SERVICES COMPANY. I SAW THAT VERY CLEARLY. WHEN I MOVED INTO AZURE IN 2010, IT HAD LAUNCHED IN FEBRUARY. MICROSOFT WAS STILL A WINDOWS AND OFFICE COMPANY, GREAT AT DELIVERING THE KIND OF WATERFALL, BOX PRODUCT MODEL. >>SURE, THERE WAS STILL WINDOWS PHONE. >>SURE, THERE WAS A WINDOWS PHONE BACK THEN. >>NOT ANYMORE. >>BUT, THAT PROCESS, WE HAD THREE-YEAR SHIP CYCLES, AND AZURE, A LOT OF THE PEOPLE IN AZURE HAD COME FROM WINDOWS AND OFFICE AND OTHER PARTS OF THE COMPANY THAT WERE NOT CLOUD NATIVE. BEING WAS MORE OF A SERVICES DELIVERY AT THE TIME. THERE WAS STILL A LOT OF THAT SYSTEM THAT THEY INHERITED FROM THE REST OF MICROSOFT. WE HAD DEV TESTING AND PRODUCT MANAGEMENT INSIDE OF AZURE, SO WE STARTED TO UNDERGO THAT TRANSFORMATION AND ONE OF THE TESTS WAS ELIMINATING DISCIPLINE AND MOVING TO DEVOPS, FORCING THE ISSUE. I THINK THAT IS SOMETHING I.T. IS DOING, AS WELL, YOU HAVE TO FORCE THE ISSUE BY SAYING THIS IS THE WAY WE OPERATE NOW. >>SO YOU THINK THAT IS SOMETHING ENTERPRISE NEEDS TO DO TO HAVE THIS TOP-DOWN, COMMAND, TYPE OF CHANGE? >>IT IS TOUGH TO CHANGE WITHOUT TOP-DOWN SUPPORT. YOU CAN ONLY ACCOMPLISH SO MUCH BOTTOMS UP. IF THE TOP SAYS WE ARE GOING THIS WAY IN THE BOTTOM SAYS WE’RE GOING THAT WAY, YOU WON’T GET ANYWHERE. >>SURE. NOW WE HAVE THIS THIRD WAVE OF COMPANIES COMING IN. WHAT HAS ENABLED THEM TO MAKE THE MOVE NOW AND WHY WERE THEY HOLDING BACK? >>WELL, I THINK THIS THIRD WAVE , REALLY A LOT OF COMPANIES THAT STILL, LIKE THAT SECOND WAVE, WERE SITTING ON THE SIDELINES, WATCHING WHAT WAS GOING ON. HAPPY WITH THE I.T. SYSTEMS THEY HAD IN PLACE. DOING WELL IN THEIR VARIOUS VERTICALS. AT THIS POINT, WHAT IS STARTING TO HAPPEN IS THEY ARE SEEING COMPETITORS MOVE TO THE CLOUD AND COMPETITORS EVEN BEING BORN IN THE CLOUD NOW AND SEEING THE AGILITY THAT THEY GET OUT OF IT. NOW, THE MATURITY OF THE CLOUD TO SUPPORT IT. THE KIND OF PROCESSES AND TOOLS THAT WE HAVE IN PLACE, THAT WE’VE MADE FOR THEM, TO BE ABLE TO MIGRATE AND SUPPORT THE MIGRATION. IT IS NOT THE, WE HAVE TO FIGURE IT OUT ON HER OWN PHASE ANYMORE, LIKE IT WAS IN THE FIRST AND SECOND PHASE. >>YOU ANNOUNCED YOU ARE A QUIET MIGRATION COMPANY YESTERDAY. I TOLD YOU ABOUT THAT, BECAUSE YOU DIDN’T REALLY KNOW. HOW BIG HAS AZURE BECOME THAT YOU DON’T EVEN KNOW WHO YOU ARE BUYING ANYMORE? >>IT IS BIG. THERE ARE TENS OF THOUSANDS OF PEOPLE NOW AT MICROSOFT WHO HAVE AZURE IN THEIR ORGANIZATION NAME. OF COURSE, IT IS THE FOUNDATION FOR MODERN MICROSOFT. IF YOU TAKE A LOOK AT OFFICE, OR XBOX, OR BING, THEY ARE ALL BUILT ON AZURE. >>I THINK THAT IS WORTH STRESSING. HE TALKED ABOUT IT BACKSTAGE. HOW IMPORTANT HAS AZURE BECOME FOR MICROSOFT? >>IT IS THE FOUNDATION. WITHOUT AZURE, OFFICE CAN’T BE SUCCESSFUL. EVEN FOR THE PRODUCTS THAT WE WERE TALKING ABOUT BACKSTAGE THAT DON’T SEEM TO HAVE A DIRECT TIE INTO AZURE, THE MENTALITY IS HOW CAN WE HELP DRIVE AZURE? HOW CAN WE MAKE AZURE, HELP CUSTOMERS GET MORE BENEFITS FROM THE CLOUD WITH USING THESE OTHER PRODUCTS THAT AREN’T DIRECTLY AZURE RELATED. >>SO WHAT IS YOUR DIRECTION FOR COMPANIES THAT WANT TO MOVE TO THE CLOUD? MAYBE THEY HAVE WORKLOADS THAT THEY CAN’T MOVE YET — WHAT YOU TELL THEM? >>EVERY COMPANY IS UNIQUE IN TERMS OF COMPLEXITY AND APPETITE FOR MIGRATION AND THE SPEED OF MIGRATION. THE EXISTING DATA CENTER FOOTPRINT AND WHAT THEY HAVE TO DO WITH THAT. THE KIND OF SYSTEMS THEY HAVE THAT I.T. DEPENDS ON. THE GENERAL PATTERN, IF YOU MAKE THAT COMMITMENT, WE ARE GOING TO GO TO THE CLOUD, AND A LOT OF TIMES THAT COMMITMENT COMES WITH, WE CUT DATA CENTER FOOTPRINT. WE CONSOLIDATE FROM FIVE OR SIX, DOWN TO ONE AND HAVE THE CLOUD BE THE SECOND KIND OF SITE. IF YOU’RE GOING TO BE CONSISTENT WITH THAT, IT IS LIFT AND SHIFT. WHATEVER YOU CAN’T LIFT AND SHIFT, EXCEPT THE MOST CRITICAL BUSINESS APPLICATIONS, SIMPLY GET THEM INTO THE CLOUD AND DO LIGHT OPTIMIZATION, SO YOU DON’T BREAK THE BANK. LIKE SHUTTING DOWN SYSTEMS WHEN THEY ARE NOT IN USE, DOING AUTO SCALING. RIGHTSIZING, PUTTING THEM IN CONTAINERS IF YOU CAN. WITH THE MORE COMPLICATED APPLICATIONS — I’M SORRY, THE ONES INVESTING AND DRIVING IN BUSINESS, MODERNIZE THEM AFTER THEY ARE IN THE CLOUD. ANOTHER IS A THIRD CATEGORY. APPLICATIONS, VERY COMPLICATED. CORE BUSINESS APPLICATIONS YOU OBVIOUSLY CAN’T LIFT AND SHIFT VERY EASILY. YOU DON’T WANT TO MODERNIZE THEM ON PREMISES, A LOT OF TIMES YOU HAVE TO TAKE A LOOK AT THOSE AND DECIDE WHAT TO DO WITH THEM. WHAT WE TYPICALLY SEE IS YOU MODERNIZE PARTS OF THEM MOVING INTO THE CLOUD, LEAVING OTHER PARTS ON PREMISES AND DO THIS KIND OF MIGRATION OVER TIME. IF THAT IS NOT POSSIBLE, BECAUSE THEY ARE TOO TIGHTLY INTEGRATED TO COMPUTE DATA, THEN WE HAVE AN EXAMPLE OF THIS. MICROSOFT SALES APPLICATIONS ARE HUGE, MONOLITHIC, RUNNING ON HP SUPERDOME’S. MICROSOFT IS GETTING MORE AND MORE TRANSACTIONAL, SO THE LOAD ON THOSE KEPT GROWING. WE KEPT GETTING BIGGER AND BIGGER, WE WOULD RUN OUT OF HEADROOM. FOR THAT KIND OF APPLICATION, WHICH IS VERY COMPLICATED, WE LITERALLY CREATED ANOTHER VERSION OF IT, BRAND-NEW, IN THE CLOUD. RAN THEM SIDE-BY-SIDE FOR A WHILE AND THEN FLIPPED THE SWITCH AND MOVED OVER. >>WHEN THESE COMPANIES MOVED TO THE CLOUD, THEY ALSO ENCOUNTER A TOTALLY NEW SET OF COMPLEXITIES. SO MUCH CHOICE. I DON’T EVEN KNOW HOW MANY PRODUCTS AZURE HAS AT THIS POINT AND THE TWO OTHER HYPER CLOUDS. HOW DO YOU EVEN MAKE THOSE DECISIONS? >>BESIDES THE SCALING, THAT IS THE CHALLENGE. KEEPING UP AND FIGURING OUT WHAT TECHNOLOGY TO USE WHEN. THE PATTERN I HAVE SEEN ENTERPRISES ADOPT IS TO CREATE CENTERS OF EXCELLENCE AND THAT HAS BECOME OUR GUIDANCE TO COMPANIES. FOR WHATEVER CLOUD PROVIDERS YOU PICK, CREATE A CENTER OF EXCELLENCE THAT IS FOCUSED ON THAT CLOUD PROVIDER. >>FOR EVERYONE YOU PICK. >>YEAH, BECAUSE THESE ARE THE MOST COMPLICATED PLATFORMS IN THE HISTORY OF COMPUTING. YOU CAN’T EXPECT THEM TO BE EXPERTS STAY >>PARTLY IT IS YOUR FAULT IT IS COMPLEX. >>IT’S NOT OUR FAULT, I BLAME IT ON THE CUSTOMERS. >>BLAMING THE CUSTOMER? IT SOUNDS LIKE BAD BUSINESS. >>WE ARE DELIVERING WHAT THEY WANT. TO BE SUCCESSFUL. >>SURE, THERE NEEDS VERY DAY >>VERY DIVERSE. >>TOTALLY. >>YOU MENTIONED MULTIPLE CLOUDS. WE CAN PLAY BUZZWORD BINGO ALL DAY, BUT LET’S TALK ABOUT HYPER CLOUD — WHAT ARE YOUR RECOMMENDATIONS? AND HOW DO YOU DEFINE, BECAUSE EVERYONE HAS A DIFFERENT ONE? >>I SEE DIFFERENT DEFINITIONS USED ALL OVER THE PLACE, BUT THE WAY I DEFINE IT, HYBRID MEANS ENTERPRISE I.T., ON PREMISES OR IN DATA CENTERS THAT I OWN OR LEASE AND ALSO FOR A PUBLIC CLOUD PROVIDER. MULTI-CLOUD, I DEFINE US IN ONE OR MORE PUBLIC CLOUDS. YOU CAN BE HYBRID, WITHOUT BEING MULTI-CLOUD AND YOU CAN BE MULTI-CLOUD WITHOUT BEING HYBRID. >>SURE. DO YOU SEE THAT? >>SURE. SOMETIMES THEY WILL CHOOSE TO BE MULTI-CLOUD. IT IS COMMON FOR AN ENTERPRISE MOVING TO CLOUD TO BE HYBRID AND MULTI-CLOUD. I ALSO SEE SINGLE CLOUD, PICKING SINGLE CLOUD. >>ONCE THEY’VE MADE THAT MOVE TO THE CLOUD, THE FIRST DAY. WE TALK A LOT ABOUT SECOND DAY AT THIS POINT, BECAUSE A LOT OF COMPANIES HAVE BEEN THERE. WHAT ARE YOUR RECOMMENDATIONS, BECAUSE NOW YOU HAVE TO OPERATE ALL OF THIS? >>OPERATION SUCH AS — >>IS IT THE CENTER OF EXCELLENCE THAT HELPS ME DO THAT? >>WHAT I RECOMMEND IS EVEN BEFORE YOU START TO MIGRATE, HAVE THE CENTER OF EXCELLENCE AND THE SECURITY ORGANIZATION AND THE COMPLIANCE PEOPLE, FIGURE OUT WHAT IT MEANS TO OPERATE A SECURE, COMPLIANT WORKLOAD IN THE CLOUD. COME UP WITH THE PIPELINE, COME UP WITH POLICY. >>SURE. >>FOR DIFFERENT CATEGORIES, CLASSES OF APPLICATIONS. THOSE THAT ARE SENSITIVE HAVE DIFFERENT SECURITY CONTROLS. THE ONES THAT MIGHT BE PUBLIC FACING. HAVING ESTABLISHED THAT, AS MUCH AS POSSIBLE, HAVING WHAT WE CALL BLUEPRINTS, ACTUALLY, IN PLACE. AZURE BLUEPRINTS THAT SERVICE POLICY TEMPLATES THAT YOU CAN ASSIGN TO ORGANIZATIONS OR APPLICATIONS, SUCH THAT THEY MEET THE REQUIREMENTS OF THE COMPANY AS THEY ARE BEING DEPLOYED AND IT IS NOT AFTER- THE-FACT. >>SURE. LET’S CONTINUE WITH THE BUZZWORD BINGO. EDGE COMPUTING POINT >>EDGE, SO EDGE IS PART OF MICROSOFT’S WORLDVIEW AT THIS POINT. WE CALL IT THE INTELLIGENT CLOUD, INTELLIGENT EDGE. BUILDING THE WORLD’S COMPUTERS IS HOW WE DESCRIBE AZURE NOW AND EDGE IS PART OF THAT INTELLIGENT CLOUD, INTELLIGENT EDGE WORLDVIEW, WHERE EDGE IN MY DEFINITION WOULD MEAN COMPUTING THAT IS NOT I.T., OUTSIDE AND I.T. DATA CENTER. >>A LOT OF PEOPLE SAY MY PHONE IS AND EDGE DEVICE. YOU DON’T BUY THAT? >>I PERSONALLY DON’T CATEGORIZE PHONE AS EDGE, BUT MORE AMBIENT COMPUTING. >>SURE. IS EDGE SOMETHING EVERY COMPANY SHOULD BE LOOKING AT? >>I DON’T THINK SO. I THINK A LOT OF COMPANIES DO, BUT I DON’T THINK IT MAKES SENSE FOR EVERY COMPANY TO HAVE AN EDGE PRESENCE. COMPANIES DELIVERING SERVICES, CONSUMER FACING SERVICES, MIGHT BE IN THEIR OWN DATA CENTERS OR A CLOUD DATA CENTER, BUT THE OBVIOUS PLACES ARE SMART BUILDINGS IN CITIES AND FACTORIES AND HOSPITALS AND OIL RIGS. YOU KNOW, THOSE ARE ALL EDGE CATEGORIES. >>SURE. AS THESE COMPANIES ARE MOVING, THEY HAVE TO THINK ABOUT A.I. AND OPERATIONALIZING ALL THAT DATA THEY ARE COLLECTING. >>YEAH. >>TALK ABOUT COMPLEXITY. >>THE WORLD, IT IS INTERESTING, BECAUSE I THINK THE WORLD IS GETTING MORE COMPLEX, AND YET SIMPLER IN SOME WAYS. IF YOU TAKE A LOOK AT THE PUBLIC CLOUD, THE FACT THAT EVERYTHING IS API DRIVEN, MAKES MANAGING RESOURCES, APPLICATIONS, SIMPLER THAN IT USED TO BE ON PREMISES. YOU CAN, WITH AN API QUERY, SEE ALL OF YOUR VIRTUAL MACHINES AND DATABASES AND ALL YOUR NET WORK ENDPOINTS IN YOUR DEPLOYMENT. WITH AN ENTERPRISE I.T. ENVIRONMENT, THAT IS AN ARCHAEOLOGY EXPEDITION THAT CAN TAKE, WHO KNOWS HOW LONG, AND YOU MIGHT NOT EVEN SEE EVERYTHING. IN SOME SENSE, THAT PART IS SIMPLER. THE MORE COMPLEX SINCE IS THAT THERE ARE A LOT OF OPTIONS OUT THERE, LIKE YOU POINTED OUT EARLIER. IF I WANTED DATABASE, THERE ARE 10 DIFFERENT DATABASES I CAN PICK FROM THAT OR EVEN OFFERED AS A SERVICE. THERE ARE A BUNCH OF OPTIONS I CAN BRING MYSELF. THE COMPLEXITY IN THAT SENSE, THE ACCESS TO DIFFERENT TECHNOLOGIES AND CAPABILITIES IS SO AT YOUR FINGERTIPS THAT IT BRINGS MORE COMPLEXITY. >>THE WAY SOME OF YOUR COMPETITORS ARE WORKING AROUND IT IS FOCUSING ON VERTICALS AND OFFERING SOLUTIONS FOR THEM. GOOGLE ESPECIALLY IS DOING THAT. IS THAT SOMETHING YOU’VE LOOKED AT? >>AT MICROSOFT WE HAVE A SLIGHTLY DIFFERENT APPROACH. FOR ONE, WE ARE A PLATFORM COMPANY. THAT IS WHAT MICROSOFT IS ALWAYS BEEN, A PLATFORM COMPANY. WE DON’T WANT TO COMPETE WITH THE ENTERPRISE CUSTOMERS. YOU WON’T SEE US CREATE AN AUTONOMOUS VEHICLE. WHAT WE WILL DO INSTEAD IS SUPPORT ENTERPRISE CUSTOMERS BY CREATING PLATFORMS FOR THEM. AND ECONOMISTS VEHICLE TRAINING PLATFORM. THAT IS SOMETHING WE WOULD DO THAT WE WOULDN’T COMPETE DIRECTLY. >>SURE. NOW GOOGLE HAS PUBLICLY SAID THEY WANT TO BE NUMBER TWO IN THE NEXT COUPLE YEARS. YOUR CURRENTLY NUMBER TWO. HOW DO YOU FEEL ABOUT THAT? >>WELL, I THINK WE’VE GOT GREAT STRENGTH. — >>THAT IS HOW YOU FEEL ABOUT IT? >>THAT HAS LED TO US BEING NUMBER TWO. SO, OUR ENTERPRISE BACKGROUND, I THINK IS A HUGE ONE. THE FACT MICROSOFT HAS BEEN WORKING WITH ENTERPRISE FOR DECADES AT THIS POINT. THAT WE HAVE THE LARGEST ENTERPRISE FIELD ORGANIZATION HAS DEEP RELATIONSHIPS AND UNDERSTANDS THE ENTERPRISE AND WE HAVE AN ENGINEERING CULTURE THAT HAS GROWN UP AROUND SERVING IN A PRICE, UNDERSTANDING ENTERPRISE NEEDS AND MEETING THEM. I THINK IT IS ONE OF THE HUGE DIFFERENTIATIONS WE’VE GOT IN THAT AREA. >>AND YOU HAVE AMBITIONS TO BE NUMBER ONE? OF COURSE YOU DO. DO YOU THINK YOU HAVE A SHOT? >>SO, THAT’S NOT THE WAY WE LOOK AT IT. I DON’T COME TO WORK EVERY DAY SAYING, HEY, WHAT DOES IT TAKE TO BE — >>I WANT TO BEAT AMAZON. >>YEAH, IT IS REALLY ABOUT HOW CAN WE MAKE OUR CUSTOMERS MORE PRODUCTIVE. I THINK IF YOU LISTEN, COMES FROM THE FRAMING OF THE CULTURE FOR THE COMPANY, WHICH IS FOCUSED ON MEETING THE COMPANY’S NEEDS AND SUCCESS WILL FOLLOW, SO THAT IS THE APPROACH THAT WE’VE GOT. >>WE ARE ALMOST OUT OF TIME, BUT A PERSONAL QUESTION. YOU ARE A HUGE STAR WARS GEEK AND YOU COLLECT MEMORABILIA, BUT NOT THE CHEAP KIND OF MEMORABILIA. >>UNFORTUNATELY NOT. >>WHAT IS THE NEXT THING — FOR THAT STUFF YOU HAVE TO GO TO AUCTIONS. WHAT IS THE NEXT THING YOU ARE BIDDING ON? >>I DON’T ADVERTISE IT IN CASE THERE ARE OTHER PEOPLE THAT MIGHT WANT TO BID ON IT. >>OKAY DAY >>THERE IS ACTUALLY AN INTERESTING PROP GOING ON AUCTION LATER THIS MONTH, THE DARTH VADER HELMET FROM EMPIRE STRIKES BACK, THE “LUKE I AM YOUR FATHER” HELMET. >>NOW EVERYONE WILL BID ON IT. >>YOU TRICKED ME INTO IT. >>THANK YOU. >>THANKS FOR HAVING ME. >>THANKS. >>>AND BEFORE WE BREAK FOR LUNCH, WE HAVE A SPECIAL ANNOUNCEMENT FROM LAST YEAR’S BATTLEFIELD DISRUPT WINNER, DEON NICHOLAS. HE HAS A COMPANY CALLED FORETHOUGHT THAT IS FOCUSED ON ENTERPRISE SEARCH. YOU WANT TO COME OUT AND TELL US WHAT IS GOING ON? THANK YOU. >>THANK YOU. EXACTLY ONE YEAR AGO, ON THE TECHCRUNCH DISRUPT STAGE, I LAUNCHED MY COMPANY, FORETHOUGHT. WE WERE IN STARTUP BATTLEFIELD. THE SAME PITCH COMPETITION THAT LAUNCHED SILICON VALLEY GIANTS LIKE DROPBOX AND CLOUD FLARE. TWO DAYS LATER, WE WON. AT FORETHOUGHT, WE USE A.I. AND NATURAL LANGUAGE UNDERSTANDING TO HELP CUSTOMER SUPPORT AGENTS BY GIVING THEM SUGGESTED ANSWERS. WE MAKE THEIR JOBS EASIER, SO THEY CAN FOCUS ON DELIGHTING THE CUSTOMERS. SO WHAT LED TO THIS MOMENT? LET’S REWIND. I’VE ALWAYS BEEN A MATH AND COMPUTERS GUY. I BUILT PRODUCTS AND INFRASTRUCTURE COMPANIES LIKE FACEBOOK AND PUBLISHED PAPERS IN MACHINE LEARNING. >>THAT IS WHERE IT BEGAN FOR ME. SINCE THEN, I’VE BEEN OBSESSED WITH THIS IDEA AI CAN HELP ANYONE BECOME SMARTER AT WHAT THEY DO. SO, I BUILT FORETHOUGHT . FAST FORWARDING MANY MANY YEARS, AS AN ENGINEER, I REALIZED ALL OF THE INFORMATION I NEED WAS BURIED IN DATA SILOS AND SCATTERED ACROSS THE ENTERPRISE. WAS THERE A WAY TO BE SMARTER AT THIS AS WELL? AND I WASN’T ALONE. I TALKED TO FOLKS IN I.T., HR, CUSTOMER SUPPORT, EVERYWHERE. AND REGARDLESS OF THE JOB, THERE WAS ALWAYS AN INFORMATION PROBLEM. FOR EXAMPLE, CUSTOMER SUPPORT AGENTS WERE LOOKING UP DOZENS OR THOUSANDS OF SUPPORT TICKETS AND KNOWLEDGEBASE ARTICLES TO FIND THE INFORMATION THEY NEEDED TO ANSWER A SINGLE QUESTION. THERE HAD TO BE A BETTER WAY. SO, THIS IDEA I HAD WHEN I WAS BACK IN SCHOOL STARTED TO BECOME LOUDER AND LOUDER THAN EVER. COULD WE BUILD SOMETHING TO HELP ANYONE BE SMARTER AND MORE EFFICIENT AT WHAT THEY DO? SO, I BUILT FORETHOUGHT ON A MISSION TO MAKE EVERYONE A GENIUS AT THEIR JOB. WE BUILT AI POWER TOOLS TO EMBED THE RIGHT INFORMATION INTO EMPLOYEE WORKFLOWS RIGHT WHEN THEY NEED IT. STARTING WITH CUSTOMER SUPPORT AGENTS. EXACTLY ONE YEAR AGO ON THIS VERY DAY, WE ANNOUNCED OUR FIRST PRODUCT, AGATHA ANSWERS. USING NATURAL LANGUAGE UNDERSTANDING OR AN OU, AGATHA HELPS CUSTOMER SUPPORT AGENTS BY GIVING SUGGESTION ANSWERS AND SEARCH CAPABILITIES. THE YEARS SINCE DISRUPT HAS BEEN A WHIRLWIND, WE IMPROVE AGENT PRODUCTIVITY BY 20 %, WE SAVED OVER 50,000 HOURS IN CUSTOMER WAIT TIMES FOR OUR PARTNERS. WE ANNOUNCE OUR $9 MILLION SERIES LIKE FROM MINI A AND GREW THE TEAM FROM FIVE TO 20 FULL-TIME EMPLOYEES. NOW, WITH THE HELP OF THIS TEAM, AS WELL AS OUR ADVISORS LIKE DR. CHRIS MANNING, WE HAVE CONTINUED TO BUILD OUT OUR STATE-OF-THE-ART NLU ENGINE. WE VALUE HELPING OUR PARTNERS THE WAY THEY HELP THEIR CUSTOMERS. OVER THE PAST YEAR, WE HEARD MANY SUPPORT AGENTS WERE SPENDING A LOT OF TIME ROUTING AND TRIAGING TICKETS INSTEAD OF FOCUSING ON HELPING THEIR CUSTOMERS DO WHAT THEY DO BEST. SO, WE LISTENED. TODAY, WE ARE LAUNCHING AGATHA PREDICTIONS EXACTLY ONE YEAR LATER. PREDICTIONS CLOSES THE LOOP FOR SUPPORT LEADERS THAT WANT THEIR MOST IMPORTANT QUESTIONS ANSWERED FIRST AND FASTEST. IT TAGS AND ROUTES TICKETS, TAKING AWAY THE PAIN OF MANUAL TRIAGE SO YOUR AGENTS CAN GET BACK TO HELPING CUSTOMERS AND SOLVING PROBLEMS. INSTEAD OF USING RIGID RULE- BASED, IF, THEN STATEMENTS, PREDICTION USES THE CORE NLU ENGINE TO FIGURE OUT THE SEMANTICS OF THE QUESTIONS ASKED AND USES THAT TO ROUTE AND TRIAGE TICKETS. OUR PARTNERS HAVE ALREADY USED US, FOR EXAMPLE, TWO SEPARATE SPAM TICKETS FROM VERY IMPORTANT ISSUES LIKE SAFETY AND PRIVACY. ANOTHER PARTNER USES US TO DIAGNOSE ROOT CAUSE ISSUES FOR THEIR TICKETS, SURFACING PRODUCT AND KNOWLEDGE GAPS. WE HAVE ALREADY GONE HEAD-TO- HEAD WITH SOME OF THE LARGEST INCUMBENT TECHNOLOGIES AND WE HAVE BEEN PROVEN TO BE THE FASTEST DEPLOYMENT IN THE MARKET. WE ALREADY HAVE ENTERPRISE CUSTOMERS LIKE MASTER CLASS AND PEER STORAGE AND WE ARE JUST GETTING STARTED. TODAY, WE ARE LAUNCHING AGATHA PREDICTIONS. IF YOU HAVE A SUPPORT TEAM ANSWERING OVER 2000 TICKETS A WEEK AND YOU WANT YOUR AGENTS TO SPEND LESS TIME TRIAGING AND MORE TIME WITH YOUR CUSTOMERS, SIGN UP FOR CUSTOM DUMBER AT FORETHOUGHT /AI PREDICTIONS OR FIND A SET THE FORETHOUGHT BOOTH WEARING THE TEAL T-SHIRT. THANK YOU. >>NICELY DONE, THANK YOU. WE ARE ABOUT TO BREAK FOR LUNCH. WE WANT TO LET YOU KNOW WHEN YOU COME BACK, WE WILL HAVE THE SAP, A COUPLE GREAT SESSIONS ON II, AND DISCUSSION ON SECURITY ENTERPRISE. ALSO AT 1, CHECK OUT THE BREAKOUT ROOM, DEON WILL BE THERE WITH TWO OTHER ENTERPRISE FOUNDERS. REALITY ENGINES AND PORT WORKS WOULD BE HAPPY TO SEE YOU. PLEASE BE BACK IN YOUR SEATS BY 1. THANK YOU.>>>WE FIGURED OUT A CHEMICAL WAY TO MAINTAIN THAT LIQUID INTERFACE AND STILL GROW AN OBJECT, INVENTED A VERY SPECIAL WINDOW NOT ONLY OPTICALLY TRANSPARENT BUT ALSO PERMEABLE WITH OXYGEN. IT WORKS IN POLAR OPPOSITE WAYS TO ALLOW TO TAKE THE LIQUID UNDERNEATH IT LIKE THE PUDDLE AND HAVE THAT BECOME THE MASS OF THE OBJECT GROWING, ALLOWS YOU TO GO REALLY FAST AND OPENS UP THE OPPORTUNITY FOR DURABLE MATERIALS THAT CAN MAKE ANY OF THE PARTS WHILE YOU CREATE THE DESIGNS. >>WHAT YOU GET OUT OF THE PRINTER IS THE FINAL PRODUCT. TRADITIONAL 3-D PRINTING, A LOT OF IT IS PROTOTYPING, THE CHALLENGE YOU HAVE WITH TRADITIONAL 3-D PRINTING IS THE INABILITY TO SCALE. >>3-D PRINTING HAS BEEN AROUND 25 YEARS OR SO. IT HAS BEEN DERIVED FROM A MECHANICAL ENGINEERING CULTURE, WHICH WAS LAYER BY LAYER, VERY PRECISELY DOING ONE LAYER AT A TIME. AS CHEMISTS, WE CAME UP WITH A CHEMICAL APPROACH THAT ALLOWS US TO GROW PARTS. THAT IS A WHOLE DIFFERENT BALLGAME, FUNDAMENTALLY DIFFERENT APPROACH FOR DOING THE PROCESS OF HOLDING AND CREATING WHAT WAS DONE IN THE PAST. IF YOU THINK ABOUT WHEN YOU’RE DESIGNING AND BUILDING A CAR OR MEDICAL DEVICE OR RUNNING SHOE OR FOOTBALL HELMET, YOU NEED LOTS OF DIFFERENT MATERIALS. POLYMERS IS WHAT WE DO, YOU NEED PROPERTIES OF A WIDE VARIETY IN TO MAKE FUNCTIONAL AND PRODUCTS. WE DEVELOPED A RANGE OF PROPERTIES, A RANGE OF MATERIALS AND RESINS THAT CAN BE FINAL PARTS. MECHANICAL ENGINEERS HAD BEEN TAUNTING EVERYONE FOR DECADES ABOUT THE VALUE OF THE LATTICE, THINK ABOUT BUILDING BRIDGES AND BUILDINGS, EVERY STRUT IS A PART AND YOU CAN EASILY IMAGINE DOING THAT. WHEN YOU MAKE A THING LIKE A RUNNING SHOE, OR YOU HAVE ALL WIDE RANGE OF STRUTS OR A FOOTBALL HELMET WITH 140,000 DIFFERENT STRUTS, THAT IS ON MAKABLE USING TRADITIONAL MANUFACTURING. THEREFORE, THIS WHOLE BRANCH OF MATERIAL SCIENCE HAS NOT BEEN ACCESSIBLE COMMERCIALLY BECAUSE HE COULD NOT SCALE IT UP OR MAKE IT. >>THE POWER OF THIS LATTICE STRUCTURE IS FOR EXAMPLE, ADIDAS SHOES, IT RETURNS ENERGY TO THE RUNNER. WHERE IS HERE, WITH THE HELMET, IT DISSIPATES ENERGY. IT IMPROVES IMPACT ABSORPTION AND PLAYER PROTECTION. DIFFERENT TYPES OF LATTICE DOING DIFFERENT THINGS ALL AROUND CONTROLLED ENERGY. >>WE THEN BUILT THE SOFTWARE TOOLS TO TAKE ADVANTAGE OF THE PRINT ABILITY OF WHAT WE CAN MAKE IN OUR RESINS. WE HAVE CLOUD-BASED COMPUTING, FINITE ANALYSIS, CONFORM LATTICES THAT ALLOWS DESIGNERS TO DESIGN WHAT THEY WANT AND WE CAN POPULATE THE PRIMITIVE CAD DRAWING WITH A WIDE RANGE OF LATTICES AND THE USER SPECIFIES WHAT MECHANICALS THEY NEED IT DIFFERENT REGIONS AND WE CAN AUTOMATE THIS IN THE CLOUD. IT REALLY INTEGRATES DESIGN WITH MANUFACTURABILITY WITH END- USE FUNCTION IN WAYS NO ONE HAS EVER SEEN COME QUITE LIKE TOGETHER AS IT DOES TODAY. >>JUST LAUNCHED AN INITIATIVE WORKING ON 100 % RECYCLABLE RESIN FOR THE DENTAL SPACE. THE LINERS THAT ARE MADE ARE TYPICALLY MADE WITH DENTAL MODELS. THOSE PLASTICS TRADITIONALLY ARE DUMPED IN LANDFILLS. THE AMAZING MATERIALS TEAM HAS BEEN WORKING ON A NEW PROCESS THAT ALLOWS, ONCE THE MODELS HAVE BEEN MADE, THAT CAN PULVERIZE THEM INTO POWDER, CONVERT THAT INTO NEXT GENERATION LIQUID RESIN WE CAN USE TO MAKE OTHER PRODUCTS. >>WE DECIDED TO GO WITH THE SUBSCRIPTION MODEL. FIRST OF ALL, THAT ENABLES CLOUD-BASED COMPUTING AND THE SOFTWARE UPGRADES. MORE IMPORTANTLY, IT DOES THE CUSTOMER, FROM THE SMALL PRINTERS, $70,000 A YEAR, A LARGE PRINTER TWICE THAT. DIGITAL’S IMPACT LOTS OF DIFFERENT SECTORS OF THE ECONOMY. MANUFACTURING HAS NOT BEEN TAPPED BECAUSE NO ONE HAS BEEN ABLE TO SCALE A FABRICATION TECHNIQUE DIGITALLY GOING FORWARD AND THAT IS WHAT WE BREAK THROUGH. ♪♪>>>SOMEWHAT COMMON TASK IN AUTOMOTIVE OR AIRPLANE US AND WE, HOLD SOMETHING WITH YOUR HEAD AND AFFIX IT TO THE CEILING, PUTTING THE PART ON THE BOTTOM OF A CAR OR ROOF OF AN AIRPLANE, OFTENTIMES IN THE INDUSTRY THEY HAVE TO HAVE TWO PEOPLE WORKING ON THE JOB. ONE GUY HOLDING THE PART IN PLACE AND THE GUY FIXING IT. THE ONE WAY TO HANDLE THIS DIFFICULTY IS TO HAVE AN EXTRA ARM ATTACHED YOUR SHOULDER, HOLD THE PART IN PLACE AND THAT FREES BOTH HANDS TO WORK ON THE TASK INSTEAD OF NEEDING AN EXTRA PERSON. MY BACKPACK STARTED WITH ONE ARM ON IT, THE ARM FOR PUSHING ON THE CEILING. THEN I HAD ANOTHER INSPIRATION WHEN I SAW SOME PEOPLE CLEANING A WINDOW. THEY HAD TO USE ONE HAND TO HOLD ONTO THE SIDE OF THE BUILDING TO KEEP THEMSELVES STABLE WHILE THEY USED THE OTHER HIM TO WORK. I DEVELOPED THE THIRD ARM THAT AFFECTS WAIST LEVEL AND IT CAN GRAB ONTO FUTURES ON THE SIDES OF HOLDINGS OR HANDRAILS OR THINGS LIKE WASHING WINDOWS OR DOING CONSTRUCTION ON SIDES OF BUILDINGS. IT CAN BRING ACTIVE STABILIZATION, WE ARE CURRENTLY HOLDING ON WITH YOUR HAND, TO PREVENT YOURSELF FROM STUMBLING OR HELP GET A BETTER BALANCE, THIS ROBOT CAN DO THAT FOR YOU. CURRENTLY, I CONTROL MY EXTRA WEARABLE ARMS WITH A GAMEPAD, BUTTONS AND JOYSTICKS, PRESS BUTTONS AND IT TRIGGERS THE ARM INTO DIFFERENT MODES LIKE PUSHING, IN THE FUTURE I WOULD LIKE IT TO BE VOICE COMMAND. >>WHEN THIS IS UP AND BUILD, HOW DO YOU TAKE THE NEXT STEP RINGING IT TO THE WORLD? >>THE NEXT STEP TO MAKE THE PLATFORM USEFUL TO THE WORLD IS TO HAVE HIGH RIPPLES WITH AUTONOMY AND HIGHER DEGREES OF PERCEPTION SYSTEM ECONOMY. CURRENTLY, DOES NOT HAVE CAMERAS OR EXTERNAL — THE RESEARCH IN ROBOTIC SEVERAL CREATED THESE GREAT OPEN SOURCE MAPPING SOFTWARE WE CAN USE TO SLAP SOME CAMERAS ON THE SHOULDER, ALLOWED TO SEE THE WORLD, PERCEIVE WHERE THERE MIGHT BE OBSTACLES, WHERE IT SHOULD GRAB, PUSH, NOT TOUCH AND IN THAT WAY ENABLE HIGHER DEGREE OF AUTONOMY. ♪>>>SCALE ROBOTICS IS DIGITIZING CONSTRUCTION THROUGH THE INTRODUCTION OF AUTONOMOUS MOBILE ROBOTS. >>LET’S BREAK THAT DOWN A LITTLE BIT. WHAT IS MONITORING, WHAT DO THE ROBOTS DO AND HOW DO THEY WORK IN THE CONSTRUCTION SITE? >>MOBILE ROBOTS MOVING AROUND AND HAVE MULTIPLE SOURCES OF INFORMATION TO BUILD MAPS OF THE WORLD. IT IS NOT QUITE AS SIMPLE AS TRADITIONAL LASER SCANNING, WE HAD A LOT MORE INFORMATION LIKE IMAGES, VIDEO, AND THE DATA THE ROBOT PRODUCES INSIDE. >>IT IS SORT OF LIKE THE GOOGLE CARS THAT GO AROUND, GOOGLE MAPPING WORLDS. YOU HAVE BUILT A VERY DEDICATED VERSION OF THAT TO WORK INSIDE CONSTRUCTION SITES. >>THAT’S PRETTY MUCH IT, LEVERAGING A LOT OF TECHNOLOGY THAT CAN FROM DEVELOPING AUTONOMOUS VEHICLES. BUT WE ARE TAKING THAT TECHNOLOGY AND REFINING IT SPECIFICALLY FOR THE CONSTRUCTION INDUSTRY. >>YOU ARE CAPTURING THE HIGH RESOLUTION GRANULAR DETAIL DATA, THERE’S NO WAY THAT WOULD BE A HUMAN JOB TO DO THAT, YOU WOULD NEED AN ARMY OF HUMANS TO DO THAT. YOU ARE NOT REPLACING A SPECIFIC JOB ROLE WITH THE SORT OF TECHNOLOGY. >>TO GIVE YOU A PERSPECTIVE OF HOW EIGHT CONSTRUCTION SITE SOLVE THIS PROBLEM, THEY WANTED TO KNOW IF ALL THE DUCKS IN THE SEASON, THEY TOOK A TWO METER STICK AND WALKED AROUND TO SEE IF THEY WOULD BUMP INTO THINGS EVERY 2 METERS. IT IS IMPOSSIBLE FOR A HUMAN BEING TO DO THIS WITHOUT A TOOL. PEOPLE DEVELOP TOOLS TO SOLVE PROBLEMS LIKE LASER MEASURE OR TAPE MEASURE OR RULER, YOU CAN NOT DO THAT FOR 100,000 ELEMENTS IN THE BUILDING, IT IS NOT SCALABLE POSSIBLE. YOU NEED TOOLS LIKE THIS TO SOLVE THAT PROBLEM. >>YOUR BACKGROUND IS IN ARCHITECTURE, YOUR DEGREE, YOU WORKED ON DESIGNING BUILDINGS YOURSELF. TALK US THROUGH HOW YOU CAME UP WITH THE IDEA OF THIS BUSINESS, REASONABLY IDENTIFY THIS WAS A PROBLEM. TALK TO US ABOUT PRICES. >>YES, ESSENTIALLY IT WAS BORN OUT OF THE FRUSTRATION OF NOT HAVING THE TOOLS TO BE ABLE TO ACTUALLY BUILD WHAT WE DESIGNED IN THE OFFICE, THIS WAS SOMETHING BORN OUT OF WORK WE WERE DOING. IT WAS AROUND THIS TIME I MET MY COFOUNDER, THE CTO OF THE COMPANY AND WE PUT THE THINGS TOGETHER INTO MORE HOLISTIC BUSINESSMAN AND ME WE COULD EXECUTE AN ADVANCE AND BRING TO THE INDUSTRY TO LIFE. >>HOW READY IS THE CONSTRUCTION INDUSTRY GENERALLY FOR SOMETHING CUTTING-EDGE AND DIFFERENT? HOW ARE YOU APPROACHING SELLING THIS TECHNOLOGY, NEW APPROACH TO THE INDUSTRY, WHICH I MET AND HAS QUITE TRADITIONAL WAYS OF WORKING? >>IT HAS BEEN SURPRISINGLY SIMPLE TO EXPLAIN TO THEM WHAT THE VALUE IS AND THEY ARE DESPERATE FOR THE SOLUTIONS. THERE’S A LABOR SHORTAGE, WE JUST DON’T HAVE ENOUGH SKILLED LABOR TO BUILD WHAT WE WANT TO BUILD AT THE PACE WE WANT TO BUILD IT. THIS IS A PROBLEM, YOU HAVE TO USE WHAT YOU HAVE MORE EFFICIENTLY. INSTRUCTION COMPANIES SPEND A HUGE AMOUNT OF ENERGY BUILDING MODELS, HUGE INFORMATION MODELS AND WORKING OUT, A LOT OF ENERGY INTO 3-D MODELING, THEY CANNOT EXTRACT THAT FROM THE CONSTRUCTION SITE. EXPLAINING TO THEM THE RETURN ON INVESTMENT FOR THIS HAS BEEN SURPRISINGLY EASY TO BE HONEST. >>HOW DID THE HUMAN CONSTRUCTION WORKERS ON SITE REACT TO YOU? >>TO BE HONEST, OVERWHELMINGLY POSITIVE. AT THE BEGINNING, PEOPLE GENERALLY A LITTLE BIT SHOCKED TO SEE A ROBOT AT A CONSTRUCTION SITE. IT IS A NOT A NORMAL THING YOU SEE, AFTER 20 OR 30 MINUTES OF YELLING WE ARE JOKES OR MAKING FUN OR STARING AT IT, TAKING VIDEOS, EVEN SNAPCHAT IT TO THEIR FRIENDS, THEY ACCEPT IT AS ANOTHER TOOL ON THE CONSTRUCTION SITE TO COME UP AND ASK A QUESTION AND UNDERSTAND WHAT IT DOES AND THEY SAY OKAY, JUST ANOTHER THING MOVING AROUND DOING ITS JOB AND HAS EVERY RIGHT TO BE HERE. IT HAS BEEN REALLY GOOD TO SEE THAT ACCEPTANCE. ♪>>>TRADITIONAL HEARING AIDS SIT BEHIND THE EAR, THESE SIT IN THAT YEAR, I’M ACTUALLY WEARING THEM RIGHT NOW. AS OPPOSED TO SELLING CLINICS, IT IS SOLD DIGITALLY OR ONLINE, THERE’S NO DISTRIBUTION IN THE MIDDLE OF IT, MEANING WE CAN ACTUALLY OFFER PRODUCTS AT A LOWER PRICE AND ALSO HAVE A MUCH MORE SEAMLESS EXPERIENCE FROM PRODUCT TO WEARING TO REHABILITATING HEARING IN SOMEONE. TRADITIONALLY, YOU WOULD NEED TO BOOK AN APPOINTMENT, WAIT A COUPLE WEEKS AND GET IN, HAVE YOUR HEARING ASSESSED AND GET INTO THE WHOLE COUNSELING, WHAT KIND OF SOLUTIONS EXIST, HOW DO YOU GET IT? YOU DON’T NEED A PRESCRIPTION PER SE, YOU ARE PRESENTED WITH A RANGE OF OPTIONS AND STRONG RECOMMENDATION FROM THE PROFESSIONAL AND THE OFFER TO BUY IT. THE CHALLENGE IN AMERICA, IT IS AN INVESTMENT, THERE’S NO REIMBURSEMENT FOR HEARING AIDS. THE AVERAGE PRICE POINT IN THE MARKET IS AROUND $4700 FOR A PAIR, THAT IS THE TRADITIONAL PROCESS. THERE’S A PERFECT SOLUTION OUT THERE FOR YOU, YOU CAN ACTUALLY IMPROVE YOUR HEARING, YOU DON’T HAVE TO GO FROM THE HASSLES OF SETTING APPOINTMENTS, BEING TESTED. YOU CAN TRANSACT ONLINE, GET YOUR HEARING AIDS AND TRIED ON. TYPICALLY 2 TO 3 DAYS AFTER RECEIPT OF THE PRODUCT, ONBOARDING OR WELCOME CALL TO MAKE SURE WE ADDRESS ALL THE QUESTIONS. AM I DOING IT THE RIGHT WAY, HOW DO I CHANGE PROGRAMS, ANY KIND OF ISSUE THAT MIGHT ARISE. WE WANT TO MAKE SURE WE TACKLE THEM HEAD-ON, UPFRONT. OUR VERY FIRST PRODUCT, THEY ARE ALL FDA APPROVED. >>THE ERGO PLUS YOU AND YOUR GOAT MAX HEARING AID LOOK LIKE THIS. IN TERMS OF THE GENESIS OF THE DESIGN, THIS PLEXI FIBER TIP, MEDICAL GRADE SILICONE. YOU CAN SEE THE MINIATURIZATION IS ABOUT TAKING THE ELECTRONICS AND SHRINKWRAPPING IT WITH A SMALL PRACTICE SHOW. MORE IMPORTANT, ONCE INSERTED IN YOUR EAR, IT ESSENTIALLY COMPLETELY DISAPPEARS. NEIL PRODUCT, THE LATEST PRODUCT OFFERING, YOU WILL NOTE A FEW DESIGN CHANGES. A LOT CLEANER LOOK IN TERMS OF THE CHARTER DESIGN, THE CHARGER POCKETS TAKING FEEDBACK FROM OUR END-USERS. WE REDESIGNED THESE POCKETS SO IT IS VIRTUALLY IMPOSSIBLE TO GET THEM IN INCORRECTLY. FINALLY, THE HEARING AID ITSELF HAS GONE THROUGH QUITE A FEW CHANGES. YOU WILL NOTICE IMMEDIATELY, MUCH MORE ORGANIC SMALLER FORM FACTOR, WE MOVE THE MICROPHONE TO THE BACK OF THE HEARING AID. THEN WE HAVE STAINLESS STEEL CONTACTS THAT ARE FLUSH WITH THE SURFACE IN CONTRAST TO THE FIRST GENERATION WHERE THE GOLD CONTACTS ARE RECESSED A LITTLE BIT. ALL RIGHT. THE DESIGN INTENT HERE WAS REALLY THREEFOLD. IMPROVING RETENTION IN THE EAR CANAL, IMPROVING COMFORT AND THE ACOUSTICS, ACOUSTICAL PERFORMANCE. BY MOVING TO A PALM DESIGN THAN THE FLEX THE FIBER DESIGN WE COULD ACHIEVE ALL THREE OF THOSE IN ONE DESIGN. YOU GET A LITTLE BIT MORE GAME AND THE OVERALL SYSTEM, WE CAN FIT MORE PEOPLE WITH THIS DEVICE. IT IN FACT IS MORE COMFORTABLE AND BETTER RETENTION. >>WE OFFER PRODUCTS ANYWHERE FROM 1650 TO 2750. IT IS STILL AN INVESTMENT, LOWER THAN THE PRICE OF THE MARKET. IT GIVES PEOPLE THAT OPPORTUNITY TO REALLY TRY, YOU COULD ALMOST CALL IT DEMOCRATIZE HEARING, HOW DO WE MAKE IT ACCESSIBLE AND GET AWAY FROM THE MEDICAL ENVIRONMENT, THIS IS IMPROVING YOU AND YOU TAKING ACTION. ♪>>>WE ARE HERE TODAY TO TAKE A LOOK AT THE LIGHT. THIS IS A DEDICATED HANDHELD OPTIMIZE FOR PORTABLE ON THE GO GAMING AND LAUNCHES SEPTEMBER 20 FOR 199 PERIOD 99. THREE REALLY COOL COLORS, TURQUOISE, YELLOW AND GRAY. OF COURSE IT IS COMPATIBLE WITH OUR VERY VERY LARGE LIBRARY OF SWITCH GAMES, ANY GAME THAT WORKS IN HANDHELD MODE WILL WORK. IT IS OPTIMIZED FOR HANDHELD GAMING, IT HAS JOY, ATTACHED TO THE SYSTEM AND ALSO A LITTLE BIT SMALLER THAN NINTENDO SWITCH. AT NINTENDO, WE ARE ABOUT GIVING THE CUSTOMER A CHOICE. WHETHER YOU ARE MORE OF A GAMER THAT WANTS TO PLAY IN YOUR LIVING ROOM WITH THE DOCK AND SWITCH OR YOU KNOW YOU WILL BE REALLY GAMING ON THE GO A LOT MORE, THERE’S A SYSTEM OUT THERE AND IT CAN SWITCH THE SYSTEM OUT THERE FOR YOU TO PICK. ♪>>>LIVEWIRE IS ON ALL THE NEW HARLEY-DAVIDSON HALO PRODUCT THAT IS EV, THE CORE ARCHITECTURE BASED ON INTERNAL PERMANENT MAGNET MACHINE AND LITHIUM TECHNOLOGY. >>HOW IS HARLEY-DAVIDSON DEVELOPING THE TECHNOLOGY FOR ITS ELECTRICAL VEHICLE PROGRAM? ARE YOU LEVERAGING STARTUPS, IS IT ALL IN-HOUSE, USING THE SILICONE VALLEY OFFICE? >>IT STARTED WITH THE IDEA IN 2011, WE STARTED INVESTIGATING DIFFERENT TECHNOLOGIES, MOTOR TECHNOLOGIES, POWER TECHNOLOGIES, BATTERY PACKS BACK TO 2011. WHAT WE STARTED DOING, YOU CAN SEE IN OUR STARTUP OF THE WEST COAST FACILITY, WE ARE BRINGING A LOT MORE OF THAT DESIGN AND DEVELOPMENT IN-HOUSE TO BRING THE ABSOLUTE BEST IN NAVY TECHNOLOGY TO MARKET. >>WEISS HARLEY DAVIDSON ACTIVITY GOING TOWARD ELECTRIC? >>LIVEWIRE IS A NEW PRODUCT AND EMERGING CATEGORY FOR HARLEY-DAVIDSON, IT REPRESENTS THE FUTURE OF HARLEY-DAVIDSON. WE CAN EXPECT TO SEE FUTURE MODELS WITH PART OF THE TECHNOLOGY YOU SEE SHOWCASED ON LIVEWIRE. >>WHO IS THE LIVEWIRE FOR? >>LIVEWIRE IS FOR A LOT OF DIFFERENT PEOPLE, WE KNOW A LOT OF HARLEY-DAVIDSON CUSTOMERS WILL WANT ONE, WE HAD PRODUCTS IN THE HANDS OF THE CUSTOMERS, HOW EXCITED THEY WERE. WE ARE LOOKING AT A NEW MARKET, THESE CUSTOMERS ARE MORE URBAN, YOUNGER, WEALTHIER. HIGH IN TERMS OF STYLE AND APPRECIATION OF DESIGN AND QUALITY AND LOOKING FOR A MOTORCYCLE FOR URBAN USE. >>FOR MARKET DEVELOPING, HOW DOES HARLEY-DAVIDSON BALANCE IT’S LOYAL CHROME AND STEEL MARKET WITH THIS NEW MARKET THAT IS A DIFFERENT DEMOGRAPHIC ? >>IT WILL BE FOR SURE, THERE WILL BE CROSSOVER AS FOR. IT IS AND NOT A, WE WILL LEAD CUSTOM DEVELOPMENT AND MAKING MOTORCYCLES THAT APPEAL TO THE CUSTOMERS AND REACH OUT TO THE NEW CUSTOMERS. NOT ONLY WITH LIVEWIRE, WE WILL HAVE A PORTFOLIO OF ELECTRIC VEHICLES IN THE FUTURE. >>SCOOTERS, BICYCLES — >>YOU NAME IT, BROADEN THE PORTFOLIO, LEAD TO WHEELERS, DIFFERENT VEHICLES, PRICE POINTS, PERFORMANCES, SOME CASES YOU DON’T NEED A MOTORCYCLE LICENSE TO JOIN THEM. WE WANT TO LEAD THE ELECTRIFICATION OF TWO WHEELS. >>THE PRICE POINT OF LIVEWIRE AT 29,000, HOW DO YOU EXPECT TO COMPETE WITH ZERO, COMING OUT WITH A NEW MOTORCYCLE ROUGHLY COMPARABLE, $10,000 LESS? >>THE REALITY IS, THEY ARE NOT COMPARABLE WHEN YOU LOOK AT THE FIT TO FINISH AND OVERALL ATTRIBUTES AND CUSTOMER EXPERIENCE. YOU THINK THE LEVEL OF CUSTOMER DEALER INTERACTION, THE FACT OUR DEALERS HAVE SERVICING ABILITY, CHARGING ABILITY AT THEIR STORES AND THE ABILITY TO GIVE THE CUSTOMER A BROADER AND BETTER WE BELIEVE CUSTOMER EXPERIENCE. WE THINK WHEN PEOPLE MAKE THE COMPARISON, THERE IS NO CHOICE. >>WITH LIVEWIRE, HARLEY- DAVIDSON WILL BE THE FIRST GAS MANUFACTURER TO RELEASE AN E MOTORCYCLE TO THE U.S. MARKET. YOU THINK YOU WILL HAVE AN IMPACT SHIFTING THE INDUSTRY IN THAT DIRECTION? >>EVERYONE IS WATCHING, THAT’S FOR SURE. THE FIRST MOVEMENT IN SPACE, THE BEST DEALER NETWORK IN THE U.S., GLOBALLY WE HAVE A STRONG DEALER NETWORK ALL IN, IT IS A VERY EXCITING TIME. I THINK YOU WILL SEE OTHERS MOVE AFTER HARLEY-DAVIDSON. >>IS LIVEWIRE ALL-AMERICAN MADE? >>GOOD QUESTION. LIVEWIRE IS ASSEMBLED IN NEW YORK AND PENNSYLVANIA, AMERICAN- MADE. >>HARLEY-DAVIDSON IS KNOWN FOR THEIR SOUND, GUESS MOTORCYCLES. IS THERE AN ELECTRIC HARLEY- DAVIDSON SOUND? >>IT WOULD NOT BE HARLEY- DAVIDSON WITHOUT THE LOOK, SOUND OR FEEL. IT WILL BE AUTHENTIC TO HARLEY DAVIDSON AND IT COMES WITH A COMBINATION OF THE ELECTRIC MOTOR, THE SPIRAL GEAR, AND DRIVELINE. EACH OF THOSE ENGINEERED SPECIFICALLY TO HAVE THAT SIGNATURE SOUND. >>A LITTLE QUIETER THAN A GAS BIKE. >>ABSOLUTELY. ♪>>>ENTITY IS A PUBLIC-PRIVATE PARTNERSHIP. WE ARE REALLY HERE TO BRING INDUSTRY, RESEARCH AND GOVERNMENT TOGETHER TO WORK ON A LOT OF THE ADVANCED MOBILITY TECHNOLOGIES, CONNECTED VEHICLES, AUTOMATED VEHICLES TO HELP BRING THEM TO SOCIETY IN A THOUGHTFUL AND BENEFICIAL WAY. WE RUN A BUNCH OF DIFFERENT LABORATORIES INCLUDING THE TEST FACILITY. WE ALSO SUPPORT RESEARCH IN A LOT OF THESE AREAS, FUNDED $27 MILLION OVER THE LAST FOUR YEARS IN ENGINEERING, SOCIAL SCIENCES, LAW, ALL KINDS OF DISCIPLINES THAT TOUCH THESE NEW TECHNOLOGIES. WE DO ALL SORTS OF RESEARCH PROJECTS. WE HAVE FUNDED PROJECTS ON MOTION SICKNESS, THE SEATING CONFIGURATIONS OF TOMORROW, WILL THEY BE A REASONABLE THING OR DO WE NEED MEDICATION TO KEEP PEOPLE FROM FEELING GROSS WHILE READING IPADS OR WHATEVER? WE ARE ALSO RUNNING PROJECT AROUND SAFETY AND TESTING HIGHLY AUTOMATED VEHICLES, HOW DO WE GUARANTEE THE SYSTEMS ARE SAFE AND READY TO GO ON PUBLIC ROADS AND MIX WITH REAL HUMANS? I THINK IN TERMS OF BUILDING PUBLIC TRUST AROUND THE SAFETY AND TESTING OF THESE SYSTEMS, WE NEED A MORE OPEN SET OF TESTING STANDARDS. IT WILL BE A WHILE BEFORE GROUPS CAN FINALIZE STANDARDS IN THIS AREA. WE CAN FEED INTO THAT WITH THE RESEARCH WE ARE DOING. YOU CAN IMAGINE 60 MEMBER COMPANIES HITTING TO AGREE ON TECHNOLOGY IS PRETTY MUCH IMPOSSIBLE. WE ARE FOCUSED ON POLICY AND INFORMING GOOD POLICY THROUGH DATA COLLECTION ON ROAD DEPLOYMENTS, THOSE SORT OF PROJECTS. THE MEMBER COMPANIES ARE HERE TO SHARE DATA WITH EACH OTHER ON A LOT OF THESE TOPICS. YOU CAN IMAGINE SAFETY FOR EXAMPLE, IS ONE NO COMPANY WANTS TO HAVE THE UPPER HAND. I THINK THEY ALL SEE THE RISING TIDE. THEY WANT TO BRING ALL THE COMPANIES UP TOGETHER AND HAVE EVERYONE FOLLOW BEST TRACK THIS IS FOR TESTING, I THINK EVERYONE BENEFITS. ♪>>>IT WAS OPENED IN THE EARLY 80s, BUILT A VARIETY OF CAR SIZES, CURRENTLY WE HAVE ABOUT 1100 PEOPLE ON THE SITE BUILDING SMALL CAR, AND — >>TALK TO ME ABOUT FOLKS THAT DON’T KNOW ARE AREN’T FAMILIAR WITH HOW FACTORIES WORK, SPECIFICALLY MANUFACTURING THREE VEHICLES ON A SINGLE LINE. WHAT IS INVOLVED IN THAT PROCESS ? >>YOU CAN HAVE SEPARATE LINES, IT WOULD BE VERY INEFFICIENT. OBVIOUSLY, THE PEOPLE AND THE FACILITIES AND ASSET HERE ON LEVERAGE TO THE FULLEST ABILITY. THE ADVANTAGE, BEING ABLE TO INTEGRATE ICE, AND AV UNTIL ONE SINGLE-LINE LEVERAGE IS THE AMOUNT OF SPACE WE HAVE, THE EXPERTISE OF THE OPERATORS AND PROVIDES OPPORTUNITY TO BE MORE EFFICIENT THAN WE WOULD IF WE WERE SEPARATED. >>IT IS UNUSUAL TO HAVE INTERNAL COMBUSTION ENGINE VEHICLE AND EV VEHICLE ON THE SAME LINE ? >>WE ARE PROBABLY THE ONLY PLANT I’M AWARE OF THAT BUILD INTERNAL COMBUSTION ENGINE, ELECTRIC MEAL, AND AUTONOMOUS VEHICLE ALL ON ONE SINGLE ASSEMBLY LINE. >>ABOUT HOW MANY EV’S AND ICE VEHICLES BUILT HERE? >>WE BUILT ORDER, THE DAYS OF BUILDING CARS AND PHILIP DEALERSHIPS ARE OF THE PAST. WE HAVE THE CAPABILITY AND FLEXIBILITY TO BUILD WHATEVER IS REQUIRED FOR THE CUSTOMERS. >>THESE ARE DONE IN BATCHES OF SIX OR SEVEN VEHICLES AT A TIME DEPENDING ON THE LIPS OF >>NOT TO GET INTO SPECIFIC STRATEGY WE USE, WE DO HAVE SOME SHARING BETWEEN THAT AV AND EV. WE SPECIFICALLY TRIED TO UNDERSTAND HOW WE CAN BE MOST EFFICIENT FOR SPECIFIC CONTENT OF EV AND TO SHARE ON THE SINGLE-LINE. WE DID DEVELOP AN AREA WITHIN THE FACILITY TO MAKE SURE WE COULD SCALE IT, SET UP VERY EFFICIENT SPECIFIC TO THAT AV, JUST A VERY FEW OPERATIONS BECAUSE THE IMMENSE AMOUNT OF SHARING, THIS WAS THE RIGHT WAY TO GO ABOUT IT. AFTER THE FEW OPERATIONS DONE DOWN HERE THAT ARE AV SPECIFIC IN THE GENERAL ASSEMBLY AREA, THE CAR GETS INTRODUCED INTO THE SAME LINE THE REGULAR BATCH OF CARS ARE IN. >>ANYTHING ELSE WE SHOULD KNOW ABOUT THE VEHICLE? >>THERE’S A LOT OF ENGINEERING YOU DON’T SEE THAT GOES INTO THIS, TO MAKE IT EV CAPABLE, GET THE DRIVER OUT OF THE VEHICLE, I COULD GO ON AND ON AND GET INTO THE NUTS AND BOLTS. WE HAVE DONE A FANTASTIC JOB INTEGRATING INTO THIS FACILITY WITH THE PEOPLE LEVERAGING WHAT WE BELIEVE IS OUR ADVANTAGE AND THAT IS THE ASSEMBLY PROCESS.>>>DGI IS RELEASING ITS GO PRO KILLER CALLED OZMA ACTION CAMERA AND I TOOK IT OUT FOR A SPIN. HERE ARE MY INITIAL IMPRESSIONS. I DON’T WANT TO BORE YOU WITH LONG-WINDED TECH SPECS YOU CAN LOOK UP ON YOUR OWN, WE WANT TO GET TO THE GOOD STUFF. IT HAS ALL THE FEATURES YOU HAVE COME TO EXPECT FROM ACTION CAN LIKE 12 MEGAPIXEL PHOTOS, 4K VIDEO, SLO-MO, TIME-LAPSE, HYPER LAPSE, VOICE CONTROL, DURABLE DESIGN, USER-FRIENDLY INTERFACE, ALL OF THE UNIVERSAL MOUNTING OPTIONS YOU MIGHT ALREADY HAVE. NOW, THE GOODIES. THE FRONT COLOR SCREEN COMPOSED OF THAT PERFECT FRAME FOR VLOGGING OR SELFIE I GUESS. I DID FIND IT USEFUL OF GETTING ACTION SHOTS OF ME RIDING THROUGH THE FOREST. IT IS ROCKING TECHNOLOGY AND ROCKSTEADY INDEED. ONE THING I NOTICED WHEN THE IES IS TURNED ON, IT CROPS THE FRAME TO ALLOW THE ALGORITHM TO DO THE BALANCING ACT, HIDE THE EDGES OFF SCREEN. NO BIGGIE, MOVE THE CAMERA BACK TO GET THE RIGHT COMPOSITION. THE HDR VIDEO FEATURE HAS THREE STOPS OF DYNAMIC RANGE WITH NATURAL TRANSITIONS BETWEEN LIGHT AND DARK AREAS AND BASED ON THE FOOTAGE, YOU CAN TELL THE DIFFERENCE. I CHOOSE HDR OFTEN THE NOT SO I CAN HAVE THE INFORMATION AND THE FOOTAGE WHEN I GO TO POST. HERE IS THE TRADE-OFF, EIS CANNOT BE ENABLED IN HDR VIDEO . WHAT? THAT IS TOO MUCH COMPUTING FOR THIS LITTLE GUY, THAT IS A BUMMER, HOPEFULLY IT IS ENABLED VIA A FIRMWARE UPDATE. THE QUICK SNAP FEATURE IS NICE TO HAVE, PRESS THE SHUTTER BUTTON AND START RECORDING VIDEO OR RECORD A VIDEO UNDER 2 SECONDS OF PRESSING. WHAT WOULD BE COOLER IS A PRE- RECORD OPTION SO IT COVERS THE 2 SECONDS OF LACK. THEY CAN THE WORK THE FOOTAGE IN, JUST IN CASE YOU DON’T LIKE THAT FISHEYE LENS LIKE. I KEEP IT ON MOST OF THE TIME UNLESS I SHOOT ESCAPE VIDEO OR POV OF A FISH, THE REMOVABLE LENS CAP IS ANOTHER DISTINCT FEATURE, THEY HAVE D FILTERS AND COLOR FILTERS TO SHOOT UNDERWATER SCENES MORE ACCURATELY. ANOTHER ACCESSORY DGI IS PROMISING AS A 3.5 MILLIMETER ADAPTION FOR EXTERNAL MICROPHONES. AS FOR THE MAKING OF THE VIDEO, GO PRO HAS SOLD OUT AND BACKORDERED. RELEASING THESE GUYS WOULD GIVE THEM A LEG UP ON THE COMPETITION. OVERALL, I DID THE CAMERA AND ITS FEATURES. DGI IS NOT SHY ABOUT STEPPING ONTO GO PRO TOES WITH THAT ACTION CAN AND WITH PRICE POINT OF US$349, ATTRACTION OPTION FOR SURE. IT WILL START SHIPPING IMMEDIATELY AT DGI.COM MAY 15 AND EVERYWHERE ELSE MAY 22. ♪>>>THE DESIGN OF THESE PRODUCTS IS ALL ABOUT A SINGULAR GOAL, THAT IS TO MAKE THE BEST OF IT. >>THIS IS A PRODUCT VERY NEAR AND DEAR TO MY HEART, LIKE MY ORIGINAL GO FIND YOURSELF, PETE, IN THE WILDERNESS AND HUNT ON THE ROAD TRIP THAT OCCURRED IN 2008. ONE OF THE IDEAS I CAME UP WITH WAS CAPTURE THE ORIGINAL MECHANISM. ANOTHER THING WAS, I WAS LOOKING AT MY TRIPOD, IT IS THE CIRCLE HERE AND HERE, IT IS THESE FOUR CIRCLES THAT DO NOT PLAY INTO EACH OTHER AT ALL AND HAVE A BUNCH OF KNOBS EVERYWHERE. THE RESULTING PRODUCT IS LIKE THIS THICK, WIDE DIAMETER MECHANISM, ALMOST ALL OF WHICH IS NEGATIVE SPACE. IS ONE OF THE PRINCIPAL ACCESSORIES, CAMERA ACCESSORIES FOR ANY PHOTOGRAPHER BEING A TRIPOD, I’VE BEEN OBSESSED WITH THIS IDEA OF REMOVING THAT NEGATIVE SPACE FOR YEARS, I WAS IN DARJEELING, INDIA SITTING AT THIS CAFE LOOKING AT THIS TRIPOD, I DREW A SKETCH OF A CIRCLE AND DIAGONAL AND HIGH WEDGES AND EVERYTHING FOLDED TOGETHER BEAUTIFULLY. THAT IS THE TRIPOD WE DREAMED ABOUT A LONG, LONG TIME AGO AND THAT IS WHAT WE HAVE TODAY. >>THIS THING IS A PRODUCT OF ENGINEERING FIRST AND FOREMOST. IN ORDER TO GET EVERYTHING TO NEST AND BE AS COMPACT AS POSSIBLE, ANYTHING YOU SEE ON THIS THAT LOOKS LIKE SOMETHING THAT IS BEAUTIFUL OR THE NEST FOUGHT FOR TOOTH AND NAIL, THERE’S NO ROOM, I THINK THAT IS VERY EVIDENT IN THINGS LIKE THE BALL HAD NESTS WITH THE LEGS. THE BALL HAD ONLY ADDS ABOUT AN INCH ABOVE THE TRIPOD HUB. WHAT THAT MEANS, IT ALSO HELPS YOU WITH INCREASING THE STIFFNESS, OVERALL STRUCTURAL STIFFNESS, THE STIFFNESS OF THE TRIPOD IS VERY HIGH IN COMPRESSED MODE BECAUSE THE DISTANCE BETWEEN YOUR CAMERA AND THE POINT WHERE THE LEGS MEET AND IT CONTROLS, THESE CONCENTRIC RINGS, EVERYTHING CONCENTRIC ON THE BALL HAD, IT IS RIGHT HERE IN A SINGLE ACCESS POINT AND YOU ARE NOT SWITCHING AROUND BETWEEN DIFFERENT KNOBS. WE DEVELOPED OUR OWN PLATE, SECURING MECHANISM THAT IS UNIQUE TO THIS TRIPOD, IT ALLOWS YOU TO TOE INTO THE TRIPOD AND THAT IS STABLE. THERE’S ALSO A LOCK THAT CINCHES EVERYTHING DOWN, LIKE A DOUBLE CINCH. WE OPTED FOR CAM LOVERS ON THIS VERSUS THAT WITH LOCKS, YOU CAN GET ALL FOUR AT ONCE AND SENT THEM DOWN ALL AT ONCE. AT THE BOTTOM STOWED IN THIS SECRET COMPARTMENT HERE IS A UNIVERSAL SMART PHONE MOUNT AND THAT CLICKS INTO THE TRIPOD LIKE THAT, LOCK IT DOWN AND YOU’VE GOT YOUR PHONE IN THERE. LIKE SO AND YOU ARE SHOOTING. WE ARE REALLY TRYING TO BE ABSOLUTE TOP-TIER PREMIUM PRODUCT BUT, IN SORT OF LIKE LOW MID PRICE POINT RANGE THAT IS ACCESSIBLE TO PEOPLE NOT JUST FLUSH WITH CASH. >>I GUESS THE FACT INTEREST BECOMES GAUGED ON IT IS KIND OF A KNOCK ON EFFECT OF WHAT KICK STARTER IS FOR US. IT HAS ALWAYS SERVED AS THIS LAUNCH VEHICLE FOR OUR PRODUCTS. YEAH, IT BECOMES THIS GAUGE MECHANISM BECAUSE YOU CLEARLY INDICATE HOW IMPORTANT THEY ARE TO PEOPLE BASED UPON THE NUMBER OF BACKERS YOU GET AND THE AMOUNT OF MONEY THAT COMES IN THE DOOR. IN MY MIND, WE HAVE BEEN A TRIPOD COMPANY SINCE 2012. THIS IS THE FIRST OFFERING NOW IN 2019.>>>WE ARE IN THE MECHANICAL ENGINEERING LAB AT OUR HEADQUARTERS IN SANTA CRUZ, CALIFORNIA. IN HERE, WE DO A LOT OF PROTOTYPING AND DEVELOPMENT OF NEW PRODUCTS AND ALSO DESIGN AND BUILD TEST FIXTURES AND MANUFACTURING EQUIPMENT THAT GETS TRANSFERRED TO OUR SAN JOSE FACILITY. THE ORIGINAL CONCEPT FOR ONE WHEEL WENT BACK TO SOMETHING I WAS TINKERING ON IN MY GARAGE AROUND 2008, ACTUALLY. I WORKED ON IT ABOUT FIVE YEARS, TRYING TO CREATE THE FEELING OF SNOWBOARDING ON POWDER AND TRYING TO COMBINE SOME OF THESE EMERGING TECHNOLOGIES I THOUGHT COULD BUILD A REALLY COOL WAY TO MOVE THROUGH THE WORLD. WE ENDED UP LAUNCHING ON KICK STARTER IN 2014. EVER SINCE THEN, IT HAS BEEN A NONSTOP RIDE REALLY OF EXPANDING AND INTRODUCING NEW PRODUCTS AND SPREADING IT AROUND THE WORLD. PEOPLE HAVE TAKEN ON ONE WHEELING AS A SPORT AND PUSHED THE PROGRESSION ALL BOARD SPORTS KIND OF HAVE. I THINK WHEN WE CAME OUT WITH PINE, PART OF IT WAS TO SAY, HEY, SOME PEOPLE ARE INTO PUSHING ALL THE LIMITS AND DROPPING EIGHT STAIR AND RIDING SUPER AGGRESSIVE TRAIN, THAT IS WHAT THE EXISTING PRODUCTS FOR. IT IS MORE CASUAL, RIDE THROUGH TOWN, ZOOM AROUND THE PARKING LOT AND HAVE FUN WITH IT. WE RAISED A COUPLE ROUNDS OF INVESTMENT EARLY ON, SERIES A ROUND, EXPAND THE TEAM AND TAKE ON NEW PRODUCT DEVELOPMENT. SINCE THEN, WE HAVE BECOME A PROFITABLE COMPANY, WHICH IS A LITTLE PRAYER IN THIS UNIVERSE BY FOCUSING ON BUILDING GREAT PRODUCT AND BEING REALLY HANDS- ON WITH THE MANUFACTURING. THAT OPENED UP COOL FREEDOM TO BUILD WHAT WE WANT TO BUILD AND EXPAND IN THE WAYS WE WANT TO EXPAND. >>WOW. >>THIS IS THE FIRST BUILT OF ALL TIME, THIS IS OLD IRONSIDES, THE LATER ITERATION, BACK THEN, YOU HAD A BUTTON ON THE PAD, THIS IS HOW THE BOARD SENSED YOU AND KNEW YOU WERE THERE. THIS IS THE BOARD WE LAUNCHED THE COMPANY WITH, WAY LESS DUCT TAPE TODAY, NOW WE HAVE PRESSURE SENSITIVE PADS, WE SHIPPED IN NINE MONTHS, WHICH IS PRETTY IMPRESSIVE. THIS IS A PLUS, WHAT HAPPENED RIGHT AFTER. THIS IS THE INTRODUCTION OF A HYPER CORE MOTOR, THIS IS THE EXAR, THIS IS THE FLAGSHIP RIGHT HERE. IT IS LIKE THE LAMBORGHINI MIXED WITH THE JEEP RENEGADE. THIS IS THE PIKE, SMALLER AND LIGHTER, IT HAS A MAG HANDLE, CARRY IT DIFFERENTLY, SUPER CONVENIENT FOR LIFE ON THE GO. IT HAS THE L.E.D. SCRIPT, IT IS MORE DEFINED. THIS THING GOES 6 TO 8 MYLES AT 16 MYLES AN HOUR. ALTHOUGH, YOU GET ENOUGH SPEED, YOU FEEL LIKE YOU ARE COOKING. IT IS LIKE THE SUBARU WR X OF THE LINE, THIS IS THE FORD F- 250. QUIET ONSET! >>PINT HAS A BUNCH OF COOL FEATURES, ONE OF THEM IS A LOWER PRICE, UNDER $1000. PART OF THE WAY WE DID THAT, WE HAVE TAKEN EVERYTHING WE LEARNED ABOUT MANUFACTURING OVER THE LAST FIVE YEARS AND USE IT TO BUILD A NEW FACTORY SPECIFIC TO MANUFACTURER PINT. AND TO KEEP THAT IN CALIFORNIA, WHICH WE ARE REALLY EXCITED ABOUT. I THINK A LOT OF ADVANTAGES TO BUILDING DOMESTIC WE, INTELLECTUAL PROPERTY IS ONE AND RETAINING THE KNOWLEDGE, YOU LEARN A LOT MAKING THE PRODUCT, IF YOU OUTSOURCE IT, SOMEONE ELSE LINDA BOUGHT LEARNS ABOUT MAKING YOUR PRODUCT. ONE THING FOR ONE WILL RIDERS, PERSONALIZING THE SPORT. IT IS THE OPPOSITE, IF A SHARED VEHICLE IS GENERIC, ALL THE SAME AND YOU HAVE NO OWNERSHIP OF IT VERSUS OWNED THING THAT HAS YOURS TICKERS AND CUSTOM COLORS, SORT OF YOUR PRIDE AND JOY. FROM THE VERY BEGINNING, I SAID I WANT TO MAKE SOMETHING PEOPLE HAVE THIS EMOTIONAL CONNECTION TO, DID IT FOR THEMSELVES. WITH THINGS WE’RE DOING RECENTLY, INTRODUCING NEW COLOR WAVES. WAYS FOR PEOPLE TO EXPRESS THEMSELVES IN THEIR OWN PERSONAL MOBILITY SPACE. WE HAVE NOW MANUFACTURING CAPACITY AND SOME OF THE LEADING TECHNOLOGY IN LIGHT ELECTRIC VEHICLES ACROSS THE VARIOUS SUBSYSTEMS. WHERE TALKING TO PARTNERS ABOUT WHAT ELSE WE CAN DO WITH THAT CORE TECHNOLOGY.>>>THE WAYMO ABILITY COMPANY IS FOCUSED ON REIMAGINING TRANSPORTATION. >>YOU SEE YOURSELF IN MORE OF A TRANSIT COMPANY THAN AUTONOMOUS VEHICLE COMPANY. >>IT IS THE BUSINESS OF PROVIDING SERVICE, MOVING PEOPLE AND AUTONOMY IS THE KILLER FEATURE TO HELP US DO THAT EVEN BETTER. >>RIGHT NOW, WE ARE STANDING OUTSIDE OUR BRICKTOWN PARKING GARAGE ON MOVIE AND, JUST NORTH OF FORT STREET, THIS IS ONE OF THE TWO START AND STOP POINTS FOR OUR MAIN MOBILITY AUTONOMOUS SHELTER. WE HAD ON THIS ROUTE, A 25 PASSENGER DIESEL VEHICLE AND THERE WERE A NUMBER OF HOURS IN THE DAY WHERE THERE WERE 2 TO 3 PEOPLE ON THE VEHICLE THAT CHEWS UP A LOT OF CURB SPACE, WE KNEW THIS WAS A ROUTE WE COULD ADDRESS WITH A SMALLER FOOTPRINT VEHICLE AND WE WERE SEEKING TO HAVE SOMETHING ELECTRIC AND AUTONOMOUS MADE IT BETTER. >>ONE OF THE THINGS, ONE OF THE PROMISED FEATURES OFTEN TIMES CENTERS ON AUTONOMOUS RUBBER TAXI SPEC CAN GO ANYWHERE, IT HAS THAT TIMELINE IN YOUR VIEW SHORTENED AT ALL? >>I THINK THE TIMELINE OF ANYTHING HAS GOTTEN LONGER. SINCE WE LAST TALKED ABOUT THIS A YEAR AGO, WE SEE MORE AND MORE COMPANIES BACK OFF THE GRAND CLAIMS THEY WILL HAVE ROBO TAXIS COVERING WHOLE CITIES. YOU SEE MORE AND MORE OF THEM FOCUSING ON SINGLE CITIES OR SINGLE USE CASES BECAUSE IT IS. IT IS A REALLY HARD ENGINEERING CHALLENGE AND THAT’S OKAY. EVEN WITH A SUBSET OF ENGINEERING CHALLENGE, THERE’S A LOT OF OPPORTUNITY AND I THINK IT IS BEST, WE AS AN INDUSTRY, FOCUS HOW WE THINK ABOUT THIS ROLLOUT ON SAFETY AND HOW WE CAN IMPROVE MORE PEOPLE’S TRANSPORTATION SAFELY THEN RATHER GO FOR ROBO TAXI AND ASSUMING THAT IS THE BEST THING. >>DETROIT DOES NOT HAVE A DEEP AND EXPANSIVE PUBLIC TRANSIT SYSTEM. WE HAVE ALL FOUR SEASONS, DIFFERENT WEATHER, THE ROADS ARE NOT ALWAYS IN PERFECT CONDITION. SO, IT REALLY LETS US GET THE SENSE OF WHAT THE VEHICLE CAN DO AND HOW IT RESPONDS TO MULTIPLE ARRAYS OF CIRCUMSTANCES. >>YOU ENVISION CONTINUING TO FOCUS ON THE MIDWEST AND EAST COAST, SOME OF THESE AREAS THAT HAVE MORE INCLEMENT WEATHER OR DO YOU FORESEE MAY MOBILITY MOVING OUT WEST AT ALL? >>NEXT YEAR, THE FOCUS IS ON STATES WITH A STRONG REGULATORY ENVIRONMENT AND FAST-GROWING CITIES WITHIN THOSE STATES TO MAKE SURE THERE’S A LOT OF OPPORTUNITY. SO, I CAN’T TELL YOU EXACTLY WHICH PLACES BUT WE ARE EXPLORING OTHER ONES.>>>WE ARE OUTSIDE OF PORTLAND, OREGON. ONE OF THE INTERESTING COMPANIES WORKING ON ANIMATION. THEY USE ACCOMMODATION OF STOP MOTION ANIMATION TECHNIQUES AND THINGS LIKE 3-D PRINTING TO CREATE ANIMATED WORLDS THAT DON’T LOOK LIKE ANYTHING ELSE OUT THERE. >>WAIT, I DON’T GET IT. >>LUCKY FOR US, THEY HAVE A NEW PHONE COMING OUT AND WE HEAR ALL ABOUT IT. >>ON THE PAGE, THIS SEEMED LIKE NOT THE KIND OF MOVIE YOU SHOULD TRY TO MAKE IN STOP MOTION, IT WAS HUGE AND THAT IS WHY WE DECIDED TO DO IT. I THINK ALL THE SKILLS WE PLANNED, ALL THE INNOVATIONS WE MADE ON THE PREVIOUS MOVIES ARE CENTRAL TO MAKING THIS ONE. >>YOU ARE THE MAN FOR THE JOB. >>THAT WAS MY BROTHER. >>THIS MOVIE, SO MANY LITTLE THINGS YOU MIGHT NOT NECESSARILY NOTICE BUT TOGETHER, THEY PROBABLY MAKE THIS THE MOST — MOVIE EVER MADE, THE FACIAL ANIMATION ON HER PREVIOUS FOUR MOVIES, WE USED A KICK SYSTEM FOR THE FACES, WE REPLACED THE FACES ON THE PUPPETS AND PIECED TOGETHER DIALOGUE SENTENCES USING PRE-EXISTING FACES. ON THIS MOVIE, WE WANTED MORE NUANCE, SUBTLE ACTING AND THE WAY WE ENDED UP DOING IT WAS WAS SPOKE ANIMATION SO EACH SHOT HAS ITS OWN SPECIFIC FACES JUST FOR THAT SHOT AND THAT ALLOWED US TO COME UP WITH PERFORMANCES THAT WERE UNIQUE TO THAT MOMENT, THAT THOUGHT TO THAT LINE OF DIALOGUE BUT IT WAS SOMETHING WE HAD NEVER DONE BEFORE BUT IT HAS GIVEN THE ANIMATION A NORMAL COMPLEXITY. >>WE USE 3-D PRINTING IN A UNIQUE WAY, WE ARE USING 3-D PRINTING AS THE MASS PRODUCTION TOOL, WE ARE MASS-PRODUCING HUNDREDS OF THOUSANDS, ACTUALLY 106,000 UNIQUE FACES FOR THE FILM MISSING LINK. LIKE THIS SORT OF TECHNIQUE ON THE CORE LINE, THE TECHNIQUE OF REPLACEMENT ANIMATION, TYPICALLY DONE BY HAND SCULPTING INDIVIDUAL FACIAL EXPRESSIONS AND THE IDEA WAS TO FUSE IT WITH 21st CENTURY 3-D PRINTING TECHNOLOGY. WE HAVE GONE THROUGH FOUR DIFFERENT TYPES OF 3-D PRINTING TECHNOLOGY. WE STARTED WITH POLY JET TECHNOLOGY MADE BY STRATEGISTS, SINGLE COLOR RESIN PRINTING. AT THE TIME, CORE LINE AND ALL THE FACES WE PRODUCED NEEDED TO BE HAND PAINTED. STARTING ON PARANORMAL, WE STARTED ON IT A 3-D PRINTER, AND IT WAS MADE BY A COMPANY CALLED Z CORP., THE C6 50, IT WAS POWDER BASED RENTING. THAT TECHNOLOGY WAS THE BASE TECHNOLOGY FOR PARA NORMAN, BOX TROLLS, AND THE HUMAN CHARACTER ON KHUMO AND THE TWO STRINGS. WE STARTED WITH THIS CONIC MACHINE THAT ALLOWED YOU TO MIX THREE COLORS, WHICH IS LIMITING, YOU COULD NOT PRINT THE RAIN IN, CHOOSE WHAT THREE COLORS HE WOULD MIX, SHORTLY THEREAFTER, STRATUS RELEASED THE J7 50 WHICH ALLOWED YOU TO PUT SIX COLORS INTO A MACHINE AND MIX THEM AND COME UP WITH THE HUGE GAMUT OF COLORS. AT THE TIME, THE SOFTWARE THEY WERE BUILDING TO RUN THE MACHINE WAS LIMITED. THEY RAN A RESEARCH COMPANY OUT OF GERMANY, THEY DEVELOPED THIS ADVANCED COLOR 3-D PRINTING SLICING SOFTWARE CALLED CUTTLEFISH. THAT UNIQUE COMBINATION AND UNIQUE RELATIONSHIP ALLOWED US TO PRODUCE THE WONDERFUL FACES YOU SEE ON MISSING LINK. >>THE REQUEST FOR THE PUPPETS AS WE MOVE THROUGH THE FILM, IT IS INCREMENTALLY MORE. THE PUPPETS TAKING A BREATH AND LANDING, IT WORKS WELL BECAUSE THEY HAVE RANGE, THAT SAID, WHEN AN OBJECT IS MADE OF SOMETHING AND IT SHOULD BE SOMETHING ELSE, ENSURING IT DOES NOT LOOK LIKE THAT MATERIAL IS SOMETHING, THAT HAS ITS OWN COMPLEXITY. WE LOOK AT LINK, HE HAS A FUR PIECE, KIND OF LIKE A RUBBER SUIT FOR THE MAIN PART, THOSE FUR PIECES FOLD OR BUCKLE, THAT DESTROYS THE ILLUSION AND PERFORMANCE. EVEN SOMETHING AS SIMPLE AS THAT TO ARRIVE AT AND PUT IN PLACE FOR MASS MANUFACTURING, THAT IS WHAT YOU ALSO HAVE TO CONSIDER. >>>I BELIEVE STOP MOTION IS RELEVANT BECAUSE IT REALLY IS QUINTESSENCE OF WHAT FILMMAKING IS. REAL LIGHTS AND OBJECTS, FROM AESTHETIC POINT OF VIEW, SOMETHING ABOUT THE TACTILITY OF STOP MOTION THAT MAKES IT COMPELLING. WHEN WE DID PARA NORMAN, ANGRY AGGIE, THE SPIRIT GIRL AT THE END, SHE WAS A COMBINATION OF STOP MOTION PUPPET, SHE HAD A CG DRESS AND FACIAL ANIMATION ON TUTTI, SHE WAS A REAL HYBRID. REMEMBER SITTING WITH PEOPLE AND THEY COULD NOT QUITE WORK OUT WHAT WAS THEY WERE LOOKING AT, WAS IT A PUPPET, WASN’T IT? THAT IS WHAT I LIKE, PEOPLE ARE RIVETED TO THIS IMAGE ON SCREEN AND NOT QUITE SURE HOW WE DID IT, THERE’S SOMETHING MAGICAL ABOUT THAT. I AM NOT A STOP MOTION PURIST. I LOVE STOP MOTION, I EMBRACE IT, IT IS MY FAVORITE MEDIUM. BUT IN THE END, WHAT I WANT TO DO IS PUT AN IMAGE ON SCREEN THAT LOOKS AS BEST AS I POSSIBLY CAN AND REALLY, FILMMAKING, SAVVY OF THIS KIND, IS TELLING A STORY AND THE HOPE IS YOU HAVE AN AUDIENCE OF PEOPLE WHO ARE COMPELLED BY THE CHARACTERS, CARE ABOUT THE CHARACTERS AND ARE SUCKED INTO THAT STORY. I DON’T WANT THE ARTIFICE TO TAKE THEM BACK OUT OF THE STORY AGAIN. THAT IS A VALID ARTISTIC DECISION TO MAKE, YOU CAN DO THAT, BY ALL MEANS, I LOVE MOVIES THAT DO THAT. FOR ME, THAT IS NOT WHAT WE ARE TRYING TO DO, WE ARE TRYING TO TELL A STORY AND USE WHATEVER MEANS POSSIBLE TO GET THE BEST IMAGE TO THE AUDIENCE. ♪>>>I WORK AT LOCKHEED MARTIN, MAINLY BECAUSE OF THE MISSION. IT IS NOT A CONSUMER CENTRIC COMPANY, IT IS KIND OF — ♪ ♪ ♪ ♪>>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS, THE PROGRAM WILL BEGIN IN TWO MINUTES. >>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS, THE PROGRAM IS ABOUT TO BEGIN. >>LADIES AND ELEMENT, PLEASE WELCOME BACK TO THE STAGE TECH CRUNCH SILICON VALLEY EDITOR AND ENTERPRISE MC, CONNIE HORSES. >>HELLO EVERYONE. THANK YOU, I APPRECIATE IT. OKAY, STARTING IN THE BREAKOUT ROOM RIGHT NOW, IF YOU ARE A STARTUP FOUNDER OR ASPIRING STARTUP FOUNDER, WE HAVE THREE PEOPLE WHO STARTED THEIR OWN COMPANIES, WHO ARE HAPPY TO HAVE TALK TO YOU ABOUT HOW TO GET GOING. AND, MEANWHILE, STARTING IN THIS ROOM WE ARE REALLY EXCITED FOR THIS NEXT CONVERSATION, IT IS AROUND AN ISSUE THAT PROBABLY KEEPS SOME OF YOU AWAKE AT NIGHT WHICH IS SECURING ENTERPRISE. PLEASE HELP ME IN WELCOMING OUR PANELISTS, GENERAL PARTNER WITH AND REASON HARLOTS, PARTNERS AT UNITED AIRLINES AND SECURITY STRATEGIST WENDY MATTER OF DUO SECURITY, ARE TERRIFIC SECURITY EDITOR ZACH BAKER. >>>HELLO, VERY WARM WELCOME TO EVERYONE. WE WILL START WITH YOU, EMILY. STEERING THE SHIP AT UNITED AIRLINES, THE TOUGH QUESTION, WHAT KEEPS UNITED NETWORK SECURE? >>OH, LOTS AND LOTS OF TECHNOLOGY AND TALENTED PEOPLE. IS WHAT KEEPS YOU SECURE. IT IS AN ONGOING PROCESS, LOTS OF MOVING PIECES AS I AM SURE YOU CAN PROBABLY IMAGINE. DESPITE HOW LONG HAVE YOU BEEN AT UNITED FOR? >>ALMOST 3 YEARS. >>HOW THINGS STARTED DEVELOPING SINCE YOU STARTED THERE? >>WE HAVE MOVED THE GOALPOST SIGNIFICANTLY OVER THE PAST FEW YEARS, THE LANDSCAPE HAS CHANGED AN AWFUL LOT FOR ALL OF US. I THINK THAT IS ONE THING WE CAN ALL AGREE ON, YOU ARE NEVER DONE. BUT, WE HAVE GROWN EXPONENTIALLY, WE HAVE ADDED A TON MORE PEOPLE WE STARTED OFF WITH ABOUT 35 PEOPLE, WE GOT ABOUT 200-ISH NOW. LOTS OF INVESTMENT ACROSS THE COMPANY AND SECURITY. I THINK IT IS AN INVESTMENT THAT IS GOING TO CONTINUE. THE WORLD HAS CHANGED SO YOU GOT TO REACT AND RESPOND. >>WHAT KIND OF INVESTMENTS HAVE YOU MADE IN THE LAST THREE YEARS? >>DUO SECURITY, FINALLY ENOUGH PLUG FOR MY FRIEND WENDY HERE. WE ARE MAKING A TON OF INVESTMENTS FROM THE VERY PROACTIVE SIDE OF SECURITY, THE KINDS OF PLATFORMS WE ARE INVESTING IN, I’M A BIG BELIEVER IN BEING AS PROACTIVE AS YOU POSSIBLY CAN. WE HAVE ALSO INVESTED FAIRLY HEAVILY IN TECHNOLOGY THAT HELPS US KEEP VISIBILITY. TO ME, YOU KNOW, THE VERY BASICS OF SECURITY IS YOU GOT TO UNDERSTAND WHAT EXIST, SO THAT YOU KNOW WHETHER IT IS VULNERABLE, SO THAT YOU KNOW WHETHER YOU HAVE BEEN EXPLOITED IN SOME WAY. SO, IT SOUNDS REALLY SIMPLE, BUT KEEPING A TRACK OF ASSETS, NOT JUST THE REGULAR KIND OF ASSETS THAT SIT IN DATA CENTERS LIKE SERVERS AND NETWORK ROUTERS AND SWITCHES AND THAT KIND OF STUFF AS YOU CAN IMAGINE IN A LINE, YOU’VE GOT A LOT OF THE I.T. WORLD THAT SITS OUT THERE BETWEEN SECURITY CAMERAS AT AIRPORTS EVERYONE IS FAMILIAR WITH AIRPORTS AND CAN THINK ABOUT THE AMOUNT OF TECHNOLOGY THAT SETS OUT THERE WITH THE INFORMATION DISPLAYS, THE SCANNERS, OR THE BAG READERS, ALL THOSE KINDS OF THINGS, SO, WE HAVE INVESTED A LOT IN VISIBILITY, OF EVERY SINGLE THING THAT IS CONNECTED TO OUR NETWORK. >>WENDY, YOU SPENT THE BEST PART OF YOUR CAREER HELPING TO SECURE COMPANIES AND ADVISE COMPANIES ON SECURITY, WHAT KIND OF ADVICE CAN YOU GIVE TO SMALLER COMPANIES AND STARTUPS. WHAT CAN THEY LEARN FROM LARGER ENTERPRISES WITH UNITED? >>ONE OF THE MOST IMPORTANT THINGS I THINK IS TO START THINKING ABOUT SECURITY FROM THE BEGINNING, EVEN IF YOU CANNOT AFFORD ALL THE ADDITIONAL THINGS. ESPECIALLY IF YOU ARE DEVELOPING SOFTWARE, YOU HAVE TO START THINKING ABOUT THAT FROM THE BEGINNING, AND YOU JUST NEED TO START WITH A SIMPLE AND SECURE PLATFORM. MARTIN WAS TELLING ME ABOUT, YOU KNOW, HOW THEY DO THINGS THERE, AND ESPECIALLY IF YOU ARE TWO PEOPLE IN A GARAGE, YOU CAN START WITH SOMETHING VERY SIMPLE, LIKE A SECURE ENDPOINT, PUTTING THINGS IN WELL-KNOWN, WELL SECURED CLOUD APPLICATIONS, USING MULTIFACTOR AUTHENTICATION, THOSE ARE REALLY GOOD STARTS. >>MARTIN, YOU’VE SPENT YOUR TIME INVESTING IN COMPANIES, HOW MUCH SHOULD STARTUPS FOCUS ON SECURITY FROM THE BEGINNING? IS THERE A GOALPOST TO AIM FOR? >>ARE YOU ASKING ABOUT, I AM DOING STARTUP ACTS, HOW SHOULD I WORRY ABOUT THE SECURITY OF MY STARTUP OR ARE YOU SAYING I AM CREATING A SECURITY STARTUP. >>ANY STARTUP. AT WHAT POINT, SHOULD STARTUPS START TO CARE ABOUT SECURITY. >>IS SO, MORE AND MORE, IT IS VERY CLEAR TO US, THAT BEST PRACTICES INCLUDE THINGS THAT COME IN SILICON VALLEY WE HAVE NOT BEEN VERY GOOD AT, WE WOULD PUT SECURITY THERE AS WELL. IN FACT, SO MUCH SO THAT NOW WHEN WE MAKE AN INVESTMENT EVEN IF IT IS A PIPSQUEAK STARTUP, SAY FOUR PEOPLE, WE WILL MAKE SURE THAT WE GO THROUGH HR TECH LIST AND AS PART OF THE ON BOARDING PROCESS, WE ALSO DO A SECURITY CHECKLIST. WHAT ARE BEST PRACTICES. THAT DOES NOT MEAN THAT YOU OVER ROTATE AND MAKE IT HARD TO DO BUSINESS, IT SHOULD BE A FIRST-CLASS CONCERN FROM THE VERY BEGINNING. >>EMILY, WHAT IS YOUR TAKE ON THAT? >>VERY MUCH OF THE CULTURAL ASPECT OF ANY COMPANY REGARDLESS OF SIZE, BUILDING SECURITY AND THAT MINDSET FROM THE VERY BEGINNING, WE HAVE SWITCHED SO MUCH PHILOSOPHICALLY HOW PEOPLE THINK ABOUT SECURITY. I THINK IT REALLY IS TABLE STAKES NOW, IT’S GOT TO BE EVERYBODY’S JOB TO THINK ABOUT, IT CANNOT JUST BE A SECURITY TEAM’S JOB TO THINK ABOUT THAT, AND I THINK THE WORLD IS EVOLVING IN THAT WAY, WE HAVE SECURITY OF THE BEGINNING OF DEVELOPING LIFECYCLES, SECURITY SCANNING AND SPELLCHECKING AND YOU LIKE THAT KINDS OF THINGS THEMSELVES, AND WE PROVIDE GOVERNANCE AND EDUCATION, WE BELIEVE IN PUSHING THAT OUT TO AN ORGANIZATION BUT FROM THE VERY BEGINNING, IT DOES NOT MATTER HOW BIG THE ORGANIZATION IS, YOU’VE REALLY GOT TO BUILD IT FROM THE START. >>HOW DO YOU BUILD THAT CULTURE IN A COMPANY THAT MIGHT NEED TO BUILD IT AS A STARTUP OR ENTERPRISE HOW DO YOU GET THAT ACROSS THE BOARD? TOP-DOWN? >>VERY MUCH FROM THE TOP DOWN I AM FORTUNATE AT UNITED WE ARE A BIG COMPANY, BUT SECURITY IS TOP OF MIND, AND THE BOARD ALL THE WAY DOWN. I TALKED TO THE BOARD EVERY QUARTER, THEY STAY VERY CLOSE TO WHAT WE ARE DOING, NUMBER ONE IS, YOU HAVE TO HAVE SUPPORT FROM THE TOP ACROSS YOUR ORGANIZATION. FOR ME, YOU KNOW, I’M THE PERSON WHO LIKES TO BE VERY TRANSPARENT ABOUT SECURITY, WHAT I’M TALKING ABOUT EMPLOYEES I TALK VERY OPENLY AND HONESTLY ABOUT WHAT WE ARE SEEING AND WHAT IS HAPPENING, YOU’RE GOING TO HAVE TO EXPLAIN TO PEOPLE WHAT THE THREATS ARE AND WHAT YOU ARE SEEING ACROSS YOUR ENVIRONMENT BECAUSE OTHERWISE YOU FIND YOURSELF IN A POSITION WHERE A SECURITY PROFESSIONAL, YOU ARE TRYING TO ASK PEOPLE TO DO SOMETHING DIFFERENTLY BUT UNLESS YOU APPROACH THAT WITH AN ATTITUDE OF, LET ME EXPLAIN THE REASON WHY, THEN YOU’RE NOT GOING TO GET THE ADOPTION THAT YOU NEED TO ACTUALLY REALLY CHANGE CULTURE. SO, I THINK FOR ME, IT IS JUST BEING VERY TRANSPARENT ABOUT IT. >>AND, THE TRICKY PART IS THAT, IF YOU ARE A BUSINESS OWNER YOU ARE NOT GOING TO SPEND ANYTHING YOU DON’T ABSOLUTELY HAVE TO UNTIL YOU KNOW YOU REALLY HAVE TO. SO, THAT IS WHAT MAKES IT VERY TRICKY, TO DO RISK MANAGEMENT WITH A STARTUP. YOU END UP DOING WHAT I CALL CHEESEBURGER RISK MANAGEMENT, WHICH IS WHERE YOU ARE GOING TO KEEP EATING CHEESEBURGERS UNTIL YOUR FIRST HEART ATTACK AND THEN YOU’RE GOING TO STOP. AND WE SEE A LOT OF COMPANIES THAT END UP PUTTING IN SECURITY CONTROLS AFTER THE FIRST BREACH BECAUSE NOW THEY KNOW IT REALLY CAN HAPPEN. IF YOU CAN RIDE THE CURVE AND PUT IN THE CONTROLS YOU NEED BEFORE THAT HAPPENS, YOU COME OUT AHEAD. >>YOU’VE INVESTED IN A BUNCH OF SECURITY COMPANIES, DO YOU HAVE ANY KIND OF PERSPECTIVE ON THE CULTURE OF THESE COMPANIES OR HAVE ANY ADVICE IN TERMS OF THEIR CULTURE, WHEN IT COMES TO APPROACHING SECURITY? >>MAYBE I WILL GO BACK TO MY EXPERIENCE AS A FOUNDER. BECAUSE I STARTED A COMPANY CALLED MISSOURI IN 2009. WE WERE KIND OF DOING THIS PRETTY ABSTRACT STUFF. AND, IN ABOUT 2010, REMEMBER, THIS IS A 60 PERSON STARTUP WITH BASICALLY NO SALES. SO, IN 2010, A SERVER WENT MISSING AND WE WERE LIKE OH, SOMEONE TOOK IT HOME, WHATEVER, IT’S JUST A SERVER. BUT, WE JUST HAPPEN TO BE GOING THROUGH THE VIDEO LOGS AND WE FOUND OUT THAT SOMEONE HAD BROKEN — REMEMBER, THIS IS A NO-NAME COMPANY ON SOME BACKWATER IN — RIGHT OFF OF SAN ANTONIO AVENUE IN MOUNTAIN VIEW. SO, SOMEONE HAD WORN A BLACK MASK, THE ONLY TIME THAT SOMEBODY HAD NOT BEEN IN THE COMPANY IN THREE DAYS AT FOUR CLOCK A.M., BROKEN WENT TO OUR MOST FAMOUS ENGINEERS DESK, STOLE THE SERVER, LOCK PICK SET TOTALLY PROFESSIONAL HIT DROVE A SILVER HONDA CIVIC WHICH IS THE MOST COMMON ON THE ROAD, OCCLUDED LICENSE PLATES, THIS IS THE WHOLE THING. WE WERE TALKING TO THE LITIGATION TEAM THAT SHOWED UP LIKE WOW, THIS IS — PRETTY QUICKLY WE HAD FEDERAL INSTIGATORS, TALK TO US, THEY SAID WE ARE SEEING THIS ALL UP AND DOWN THE ROAD, WE THINK THERE IS MAYBE KIND OF A LARGER EFFORT GOING ON. WE DON’T KNOW BUT WE ARE TRYING TO TRACK IT DOWN. BUT, AT THAT POINT IT BECAME VERY CLEAR I THINK TO THE BROADER COMMUNITY, CERTAINLY OUR BOARD INVESTMENT COMMUNITY THAT SECURITY IS A VERY SERIOUS THING EVEN IF YOU ARE A SMALL STARTUP READ AND YET, THERE IS NOTHING WE COULD HAVE DONE TO STOP NATIONSTATE BLACK MAC — BLACK MASK LOCK PICK SET TWO MINUTES INSIDE OUTSIDE INFORMATION. WHAT WE NEED TO STRESS IS YOU NEED TO HAVE THE BASICS AND PROCESS, AND UNDERSTAND REMEDIATION STEPS AS SOON AS SOMETHING LIKE THIS HAPPENS SO YOU KNOW WHAT TO DO. IT’S NOT ABOUT KEEPING THE PERSON WITH THE BLACK MASK OUTCOME IT IS ABOUT HAVING THE INFRASTRUCTURE IN PLACE, AND HAVING EVERYBODY KNOW WHAT THOSE ARE SO THAT IF SOMETHING HAPPENS IT CAN BE REPORTED AND YOU CAN FOLLOW THE SAFE PROCESS FOR WHATEVER REASON, INSURANCE OR LIABILITY OR WHATEVER. >>SECURITY COMES FIRST WE ALL UNDERSTAND THAT THAT’S A GOOD WAY TO START, HOW DO YOU BUILD OUT THE SECURITY TEAM AND WHAT ARE SOME CHALLENGES? CAN YOU TALK ABOUT THAT, WENDY? >>I THINK THE PRIMARY THING THAT WE HAVE SEEN IS HAVING THE EXPERTISE, KNOWING WHAT YOU NEED TO DO, AND SOMETIMES THAT CAN COME FROM OUTSIDE. BECAUSE AGAIN IF YOU ARE A SMALL COMPANY YOU CANNOT AFFORD TO INVEST IN SOMEONE WHO IS DEDICATED TO HAVING THAT LEVEL OF EXPERTISE. IT IS PERFECTLY OKAY TO GATHER THAT, BUT IT IS IMPORTANT TO KNOW AT THE VERY LEAST, WHAT OPPORTUNISTIC ATTACKS ARE HAPPENING TO EVERYBODY THAT YOU NEED TO PROTECT AGAINST, WHETHER YOU THINK YOU ARE A TARGET OR NOT, YOU’RE STILL GOING TO GET HIT BY THE SAME THINGS THAT EVERYBODY ELSE’S. YOU NEED TO MAKE SURE THAT YOU ARE BUILDING YOUR THINGS SECURELY, WHATEVER YOU ARE BUILDING, AND YOU NEED TO KNOW THAT WHATEVER INFRASTRUCTURE YOU ARE USING, ESPECIALLY IF IT IS FROM A SERVICE PROVIDER, IF IT IS BEING SECURED AS WELL AS IT CAN BE. SO, THOSE ARE THE THREE THINGS THAT YOU CAN START WITH FROM DAY ONE. AND THEN, YOU CAN WORRY LATER ABOUT WHETHER YOU SEE EVIDENCE YOU ARE BEING TARGETED BECAUSE OF YOUR ILLNESS OR THE DATA YOU HAVE. >>EMILY, YOU HAD SIGNIFICANT GROWTH, HOW DID YOU GO ABOUT BUILDING OUT THAT TEAM AND GROWING ON SUCH A VAST SCALE? >>YEAH. YOU KNOW, SIEBER IS SUCH A GROWING INDUSTRY. DON’T HOLD ME TO THIS BY THE LAST THING I READ ON IT, ABOUT TWO MONTHS AGO, WAS THAT THERE WERE 20 PERCENT MORE JOBS IN CYBER DOWN THERE WERE PEOPLE TO FILL THEM. SO, YOU THINK ABOUT JUST HOW COMPETITIVE THE MARKETPLACES, WE’D ALL BE FOOLISH AS — FOOLISH AS SECURITY PROFESSIONALS IF WE DIDN’T THINK THAT ALL OF OUR EMPLOYEES WERE GETTING TAPPED ON THE SHOULDER EVERY WEEK. AND SO, THE BIG PART FOR ME, AND CERTAINLY UNITED, BUT ANYWHERE I WOULD FIND MYSELF, THE JOB IS A LEADER BECOMES EVER MORE CRITICAL, WITHIN A SECURITY ORGANIZATION. BECAUSE, THERE IS SO MUCH COMPETITION. THE BAY AREA ESPECIALLY COME IT IS A HIGHLY COMPETITIVE ENVIRONMENT HERE, TO GET CYBER PROFESSIONALS. THE PEOPLE YOU WORK WITH, THE PEOPLE YOU WORK FOR, AND THE ENVIRONMENT WHERE PEOPLE COME TO WORK EVERYDAY THAT IS A LEADER’S JOB TO CREATE THAT ENVIRONMENT, WE HAVE CREATED AN ENVIRONMENT THAT IS INCREDIBLY DIVERSE, FOR EXAMPLE WE ARE 51 PERCENT FEMALE IN MY GROUP, SIX PRESENT PEOPLE OF COLOR, WE REPRESENT 33 NATIONALITIES. WE ARE VERY PROUD OF THAT, WE’VE DONE THAT BY DESIGN, BECAUSE IT WAS A GREAT OPPORTUNITY, WHEN YOU’RE TAKING AN ORGANIZATION, TAKING A TEAM WITH SUCH GROWTH TO DO THAT, WITH REAL CREATIVITY AND DIVERSITY OF THOUGHT, AT THE VERY CENTER BECAUSE LET’S FACE IT, WE ARE SOLVING PROBLEMS WE HAVE NEVER SOLVED BEFORE. AND IN DOING THAT, YOU HAVE PEOPLE THAT HAVE ALL THE SAME BACKGROUND — YOU CAN’T HAVE PEOPLE THAT HAVE ALL THE SAME BACKGROUNDS. SO FOR ME IT IS BEYOND THE TRADITIONAL WAYS OF HIRING PEOPLE AND IS A LOT ABOUT THE CULTURE THAT YOU CREATE IN THE WORKPLACE AS WELL. >>WHAT ARE THE CHALLENGES IN BUILDING A SECURITY TEAM AT A STARTUP? >>YEAH YEAH. ACTUALLY, THERE IS A TREND, I WILL GIVE YOU MY OPINION, BUT I WOULD ACTUALLY LOVE BOTH OF YOUR OPINIONS BUT FOR MY INVESTMENT THESIS, BUT ALSO — SO, HERE’S THE TREND WE ARE SEEING, THERE IS A NEGATIVE IN EMPLOYMENT RATE, RIGHT? SO, THAT MEANS, OKAY, BIG COMPANY, IT IS HARD TO HIRE PEOPLE, WHATEVER, YOU HAVE TO PAY THEM MORE, BUT WHAT THAT MEANS FOR LITTLE COMPANY, YOU CAN’T HIRE PEOPLE THERE’S JUST NO WAY. SO, WE ARE SEEING THE EMERGENCE OF NEXT-GENERATION MSS P, WHICH IS MANAGED SECURITY SERVICE PROVIDER, THIS IS SOMEONE THAT WILL DO YOUR SECURITY IN AN OUTSOURCED WAY. FROM MY STANDPOINT, THAT MAKES A LOT OF SENSE, BECAUSE I’M LIKE WOW, YOU CAN’T HIRE THE TALENT MAYBE YOU CAN GET SOME REALLY TALENTED PEOPLE, THERE’S A NUMBER OF COMPANIES YOU PROBABLY HEARD OF THEM STARTING TO DO THIS WHEN IS A LISTEN WE WILL BE YOUR SECURITY OPERATIONS UNDER, WE WILL DO YOUR BEST PRACTICES AND RUN THESE THINGS ON THE BACKGROUND AND WE’VE BEEN SAYING YOU KNOW, MAYBE THAT MAKES SENSE FROM AN INVESTMENT SIDE BUT ALSO MAYBE WE SHOULD START MAKING THESE CONNECTIONS TO STARTUPS. ON THE OTHER SIDE, LIKE WOW, THIRD-PARTY DOING YOUR SECURITY YOU’RE TAKING THIS SERIOUSLY LIKE REALLY? >>YEAH, FOR ME, EVERY COMPANY IS AN ECOSYSTEM THESE DAYS. YOU CANNOT DO IT ALL ON YOUR OWN. I SEE PARTNERSHIPS, DO I WAS ONE OF THEM, WE HAVE MANY MANY SECURITY PARTNERSHIPS AS I’M SURE YOU CAN IMAGINE. THE PEOPLE WE WORKED WITH OUR EXTENSIONS OF US AND IT COMES DOWN TO BEING HONEST AND TRANSPARENT WITH ALL OF THESE PROVIDERS, SO BE HONEST WITH THEM, AND HELP THEM UNDERSTAND WHAT YOUR ENVIRONMENT LOOKS LIKE, SO THAT THEY CAN HELP BEST PROTECT YOU BUT YOU CANNOT REALLY DO THAT ON YOUR OWN. WE USE A LOT OF THIRD-PARTY PROVIDERS TO HELP US WITH THESE THINGS, BECAUSE, YOU KNOW, 24 SEVEN ROUND-THE-CLOCK ISINGLASS IT’S NOT EASY TO CREATE THOSE ENVIRONMENTS IF YOU’RE JUST GOING TO HIRE FULL-TIME. >>JUST CUTTING IN, SINCE I HAVE YOU HERE AND YOU GUYS ARE BOTH SO GREAT, WOULD YOU RECOMMEND STARTUP VERSUS SECURITY? >>I WOULD, EXCEPT WITH THE CAVEAT, THAT HALF OF SECURITY IS UNDERSTANDING WHAT IT MEANS FOR YOUR BUSINESS, AND DOING THINGS IN A SECURE WAY, DOING YOUR BUSINESS IN A SECURE WAY. SO, THAT MEANS YOU HAVE TO BUILD THE PROCESSES. IT IS NOT JUST BUYING BOXES AND GETTING SOMEBODY ELSE TO RUN THEM. SO, YOU CANNOT — YOU CAN OUTSOURCE BUT YOU CAN’T SAY GO DO THAT SECURITY THING. YOU KNOW, WE ARE BUSY. WE HAVE HAD EXAMPLES WHERE ONE TIME, WE SAW A SERVER THAT WAS SPEAKING TO ANOTHER IP IN ROMANIA AND THOUGHT OH MY GOD WE ARE A TEXAS STATE AGENCY WE DON’T DO BUSINESS WITH ROMANIA, SO WE PANICKED AND CALLED AN ALERT AND EVERYTHING, TURNS OUT THAT WE HAD A STATE CONTRACT WHERE THE ONLY VENDOR THAT COULD UPDATE THAT SOFTWARE WAS IN ROMANIA, SO ACTUALLY WE WERE DOING BUSINESS WITH ROMANIA. THAT IS THE SORT OF THING THAT AN EXTERNAL VENDOR CAN NEVER UNDERSTAND AND DO FOR YOU, AND YOU CANNOT GIVE UP THAT PART. >>IT COMES DOWN TO CULTURE WITHIN THE COMPANY. SO, WHEN IT COMES TO BEST PRACTICES AND INVESTIGATIONS, THEY WILL DO ANYTHING THEY CAN TO GET INTO YOUR SYSTEM, HOW DID THINGS LIKE BEST PRACTICES PLAY INTO YOUR SECURITY FOCUS ENTERPRISE? WENDY? DO YOU THINK THEY DO? THAT BEST PRACTICES ARE IMPORTANT? >>I HATE THE TERM BEST PRACTICES. I WOULD RATHER IS A MINIMUM BASELINE PRACTICE BECAUSE THE BEST PRACTICE TO SECURE SOMETHING IS TO COVER IT IN CONCRETE AND SINK IT TO THE BOTTOM OF THE POOL. AND, NOBODY IS GOING TO DO THAT. SO, YOU ARE GOING TO COMPARE YOUR PRACTICES WITH YOUR PEERS, ASSUMING YOU KNOW WHO YOUR PEERS REALLY ARE, ASSUMING YOU CAN DO THE SAME THING THAT THEY DO, AND, YES, THAT IS A GOOD WAY TO LEARN ABOUT THINGS THAT YOU DIDN’T KNOW YOU SHOULD BE DOING, BUT AS YOU SAID, YOU KNOW, THE BAD GUYS DON’T NECESSARILY RESPECT BEST PRACTICES, THEY ARE ONLY GOING TO RESPECT, YOU KNOW, WHAT ACTUALLY WORKS. HE >>WHAT IS THE BASELINE ESSENTIALLY, SOMETHING THAT YOU START IN THE BEGINNING OF THE BUILDUP FROM THERE. THAT SOME THING YOU SEE A LOT? >>YEAH, ABSOLUTELY, I TALKED ABOUT THIS CONCEPT OF VISIBILITY. UNDERSTANDING YOUR ENVIRONMENT IS ABSOLUTELY NUMBER ONE. IF YOU DON’T KNOW IT EXISTS, YOU CANNOT SECURE IT. A SECOND TO THAT IS, YOU NEED TO UNDERSTAND WHETHER SOMETHING HAS A VULNERABILITY TO IT, OR WHETHER THERE IS A THREAT TO THAT THING, THAT EXISTS IN YOUR ENVIRONMENT. AND THEN, YOU NEED A WAY TO UNDERSTAND WHETHER THAT VULNERABILITY HAS BEEN EXPLOITED IN SOME WAY. SO THAT IS WHERE THE MONITORING OF SYSTEMS COMES INTO PLAY. BUT, REALLY, THAT IS THE BASELINE, TO ME, IS JUST UNDERSTANDING YOUR ENTIRE ECOSYSTEM, AND WHAT THAT LOOKS LIKE. BUT, IT COMES TO THE ATTACKERS, YOU CANNOT ATTACK BACK, REMEMBER. BEST PRACTICES THAT THEY DISMISS , IS IRRELEVANT FOR PEOPLE TRYING TO PROTECT AN ORGANIZATION BECAUSE YOU ARE NOT LEGALLY ALLOWED TO FIGHT BACK. SO, WHAT BECOMES THE MOST IMPORTANT THING, GETS HARDER WITH LARGER COMPANIES, IS, YOU HAVE TO WORK WITH YOUR BUSINESS COLLEAGUES TO UNDERSTAND WHAT IS TRULY IMPORTANT TO THE BUSINESS. UNDERSTANDING WOULD RUN YOUR BUSINESS, WHAT DRIVES YOUR BUSINESS, ITS SYSTEMS, ITS CRITICAL SYSTEMS THAT KEEP THE OPERATION MOVING, CERTAINLY IN OUR ENVIRONMENT. IF SO, I THINK IT IS, YOU REALLY HAVE TO TAKE A LOGICAL COMMON SENSE APPROACH TO UNDERSTANDING WHAT MATTERS MOST TO YOUR BUSINESS. AND THE RELATIONSHIPS THAT YOU HAVE, WITH THE BUSINESS TEAMS, THE ONLY WAY YOU’RE GOING TO GET TO DO THAT, BECAUSE IT CANNOT BE MY DECISION OR MY TEAM’S DECISION. WE ARE SECURITY FOLKS. WE SECURE WHAT THEY TELL US MATTERS THE MOST. SO, IT IS A BASELINE IN TERMS OF UNDERSTANDING, BUT YOU GOT TO FIGURE OUT WHAT IS MOST IMPORTANT TO THEM. HE >>WE DISCUSSED THE TEAMS WHAT ABOUT TECHNOLOGY? HOW DO YOU SIFT THROUGH A LOT OF THE NOISE IN TERMS OF PRODUCT AND SECURITY SERVICES THAT YOU SEE ON THE MARKET? COULD YOU TALK ABOUT THAT? >>YES, SO I’M GOING TO SAY UNDER TWO LENSES, FROM AN INVESTOR LENS, I THINK WE ARE SEEING AN ERA WHERE IT IS ALMOST IMPOSSIBLE TO SELL, IN THIS DAY AND AGE WE HAVE A LOT OF PRODUCT THAT ARE VERY COLLOCATED AND TAKE A LONG TIME TO UNDERSTAND AND IMPLEMENT, ARE DIMINISHING, ADOPTED BY INDIVIDUALS FOR EXAMPLE BEFORE THE COMPANIES, REPORTS THAT THESE HARDWARE KEYS, THIS IS LIKE A CONSUMER PHENOMENON OF HARD-CORE SECURITY GEEKS THAT WOULD USE THESE BEFORE THEY BECAME AN INDEPENDENT PHENOMENON. SO I THINK WHAT HAS HAPPENED IS SECURITY, WHICH IS ACTUALLY VERY INTERESTING AND GOOD FROM A DEFENSE STANDPOINT, IS WE ARE SEEING DEFENSE STANDPOINTS BECOME SIMPLE FIGHT AND CONSUMER ARRIVED AND I THINK INDIVIDUAL USERS, ESPECIALLY TECH USERS ARE MORE SAVVY ABOUT WHAT TO USE. I THINK DUO ACTUALLY PAVED A LOT OF THE WAY FOR THIS BUT YOU SEE COMPANIES LIKE CANARY IF YOU DON’T KNOW IT, OR ET CETERA. SO, MY SENSE IS ESPECIALLY IF YOU ARE A STARTUP, I THINK YOU SHOULD UNDERSTAND SIMPLIFIED CONSUMER ISA SECURITY PRODUCTS, THOSE ARE ALREADY BEING ADOPTED GENERALLY AND LEAD TOWARDS THOSE AND DON’T WORRY SO MUCH ABOUT THE MUCH MORE SOPHISTICATED HIGH-END THINGS THAT ARE KIND OF — THEY ALMOST FEEL LIKE MUSEUMS OF COMPUTER SCIENCE PAST. HE DOES BECOME RELEVANT CERTAINLY IN EMILY’S WORLD, BUT MUCH MORE IN THE SMALLER COMPANY WORLD. DESPITE WENDY, ARE THERE ANY TECHNOLOGIES YOU THINK WE SHOULD EMBRACE, OR DO YOU THINK THERE ARE ANY KINDS OF TECHNOLOGIES WE SHOULD AVOID? >>YOU KNOW, THAT IS A TRICK QUESTION. THAT IS NOT FAIR. IT IS REALLY TOUGH. THE ONE THING I CAN RECOMMEND, THOUGH, IS THAT SOME MEAL, THE CHIEF SECURITY SCIENTIST AT BANK OF AMERICA CAME OUT OF A MATRIX CALLED THE CYBER DEFENSE MATRIX, ANTI-OPEN SOURCED IT. IF YOU SEARCH FOR THE CYBER DEFENSE MATRIX YOU WILL FIND IT. IT IS A VERY SIMPLE WAY OF LOOKING AT THE FUNCTIONALITY OF EACH SECURITY TECHNOLOGY, WHAT IT DOES, WHETHER IT’S PROTECT, DETECT, RESPONSE, AND WHAT LAYER IT DOES IT ON. WHETHER IT DOES IT AT THE APPLICATION LAYER, DATA LAYER, AND SO ON. IF YOU PLOT OUT WHAT YOU HAVE IN YOUR PORTFOLIO AGAINST THAT, YOU CAN START TO GET AN IDEA OF WHERE YOU MIGHT HAVE GAPS, WHERE YOU HAVE OVERLAPS, AND IT MAY BE A GOOD WAY TO RATIONALIZE WHAT YOU HAVE TODAY. BUT, IF YOU ARE JUST STARTING OUT, I WOULD AGREE WITH MARTIN, THAT LET THE CONSUMER EXPERIENCE LEAD YOU INTO WHAT IS MOST USABLE FOR YOUR ORGANIZATION. >>DO YOU HAVE ANY THOUGHTS ON THAT? >>FOR US, OBVIOUSLY WE ARE SUCH A VARIED COMPANY, AND THE KINDS OF SOLUTIONS THAT WE SEEK OUT USUALLY, FOR COMPANIES THAT TRY TO COME TO THIS WE KNOW WHAT WE WANT, WE KNOW WHAT GAP WE ARE TRYING TO FILL AND WE WILL GO OUT INTO THE MARKETPLACE THEN AND START DOING RESEARCH AROUND THAT, IT IS VERY DIFFICULT TO GET KIND OF THE PUSH AT A BIG COMPANY AS IT IS WITH A SMALLER GROUP. BUT, YEAH, I MEAN THERE IS STILL SO MUCH OPPORTUNITY, THERE IS STILL A LOT OF PROBLEMS OUT THERE THAT ARE NOT SOLVED, WHICH IS WHERE TO MEET PEOPLE LIKE THE THREE OF US WORK VERY CLOSELY TOGETHER AND YOU KNOW, LOTS OF SECURITY ORGANIZATIONS WORK VERY CLOSELY TOGETHER. WE ARE ALL MUCH STRONGER TOGETHER THAN WE ARE INDIVIDUALLY. AND, I THINK ONCE WE IDENTIFY THOSE PROBLEMS AS PEOPLE LIKE MARTIN THAT INVEST IN SOLUTIONS THAT PEOPLE LIKE ME END UP CONSUMING. >>WE ARE VERY LOW ON TIME, BUT MY LAST QUESTION, THE THREAT LANDSCAPE IS CHANGING. WHAT A BIT OF ADVICE WOULD YOU GIVE IN TERMS OF SECURITY, TO A FOUNDER, OR A STARTUP IN THE AUDIENCE, MARTIN? >>I THINK I WILL JUST RESTATE WHAT I SAID BEFORE, WHICH IS, IT IS IMPORTANT TO REALIZE THAT EVEN AT A STARTUP, THE ATTACKS ARE FAIRLY SOPHISTICATED. BUT, THE GOOD NEWS IS, YOU KNOW, THERE ARE FAIRLY SIMPLE THINGS YOU CAN DO, EVEN AT THAT STAGE WHICH IMPROVE YOUR POSTURE. THINGS SUCH AS PHYSICAL SECURITY LIKE WE IMMEDIATELY GOT A GUARD, THAT WAS NOT VERY EXPENSIVE AND IT REALLY MATTERED AND IT STOPPED ATTACKS. THERE ARE A NUMBER OF SECURITY DEVICES THAT REALLY HELP, ARE REALLY EFFECTIVE. I’M A HUGE FAN OF CHROME BOOKS, I’M A HUGE FAN OF DUO AND AUCTOR, SO I WOULD SAY UNDERSTAND THE SIMPLE CONSUMER I SECURITY PRACTICES, DO THINGS IF YOU ARE A LARGE SECURITY COMPANY LIKE PHYSICAL SECURITY, AND THEN HAVE A PROCESS IN PLACE FOR IF AND WHEN AN INCIDENT DOES HAPPEN. HE >>EMILY? >>I’M A BIG BELIEVER IN TESTING THINGS OUT AS AN EARLY ADOPTER. EVEN AT A BIG COMPANY YOU CAN STILL DO THAT IN A CONTROLLED ENVIRONMENT. MY ADVICE WOULD BE, YOU KNOW, TRY AND FOCUS IN ON THE PROBLEM THAT YOU ARE TRYING TO SOLVE. THAT IS REALLY, THAT IS THE WAY I CERTAINLY LOOK AT THINGS IS, WHAT PROBLEM AM I TRYING TO SOLVE AND HOW CAN YOU HELP ME SOLVE THAT PROBLEM. SOMETIMES I MIGHT NOT REALIZE THAT I’VE GOT A PROBLEM THERE AND YOU’RE GOING TO TELL ME THAT I’VE GOT ONE, AND THEN IT IS A CONVERSATION. BUT, I THINK IT IS ALL ABOUT THE PROBLEM, AND SOMETIMES WE CAN OVEREXTEND ON SECURITY BEING SO COMPLICATED THAT WE FORGET ABOUT WHAT IT IS WE ARE TRULY THERE TO DEAL WITH. >>WENDY? >>MY FINAL BIT OF ADVICE WOULD BE, ALL APOLOGIES TO TECH CRUNCH, DON’T DO YOUR RISK MANAGEMENT BY HEADLINES. BECAUSE, IF YOU READ ONLY HEADLINES YOU WILL THINK THE WHOLE WORLD IS ON FIRE. AND, IT ISN’T. >>ESPECIALLY IF YOU READ MY STUFF. >>THAT’S RIGHT. [ LAUGHTER ] TALK TO YOUR PEERS, AND FIND OUT WHAT THEY ARE REALLY SEEING, AND EXCHANGE AS MUCH AS YOU CAN WITH THEM BECAUSE THAT IS WHERE YOU WILL GET THE REAL GOOD THREAT INTELLIGENCE. >>THANK YOU SO MUCH FOR YOUR TIME. THANK YOU. >>THANK YOU VERY MUCH. >>THANK YOU. >>>STARTING IN A FEW MINUTES IN THE BREAKOUT ROOM, SECOND FLOOR OF THE FORUM IS A DISCUSSION ON HOW TO SET THE OPTIMAL PRICE FOR YOUR PRODUCT, AND THE PRICE EFFECTS OF GERMANY, COMPANY THAT SPECIALIZED IN THIS VERY THING IS LEADING THE DISCUSSION. SO, YOU MIGHT WANT TO CHECK THAT OUT. IN THE MEANTIME RIGHT NOW, WE ARE REALLY SO PRIVILEGED TO BE INTRODUCING THE CEO OF ONE OF THE WORLD’S BIGGEST ENTERPRISE COMPANIES, BILL McDERMOTT, IN A CONVERSATION WITH FREDERICK OF TECH CRUNCH. >>QUITE A ROUND OF APPEAL APPLAUSE FOR YOU WE DON’T USUALLY GET THAT. THANK YOU FOR BEING HERE. >>I DON’T DO A LOT OF THESE, SO I APPRECIATE IT. HE >>TO GET STARTED, I WANT TO TALK A BIT ABOUT YOU BEFORE WE TALK ABOUT S.A.P. ITSELF. WHEN YOU WERE 16, YOU BOUGHT YOUR OWN DELI, TO PUT YOURSELF THROUGH SCHOOL. HE STARTED OUT AS A REAL AUNT RENEWAL, A SELF-STARTER. BUT, THEN YOU STARTED OUT AT ENTERPRISE COMPANIES, WHY? >>WELL, I WAS BROKE AS A KID, SO I NEEDED THE MONEY. I TRADED IN THREE PART-TIME JOBS, SO I WAS ACTUALLY SIMPLIFYING MY LIFE, TO BUY A CORNER STORE. AND THAT IS WHY THE WINDOWS DREAM IS FROM THE CORNER STORE TO THE CORNER OFFICE. THE BIG IDEA OF BEING A TEENAGE ENTREPRENEUR WAS REALLY HAVING THE ULTIMATE RESPECT, PROFESSIONAL COURTESY, APPRECIATION FOR CUSTOMERS. BECAUSE, I LEARNED EARLY ON YOU CAN GET ANYTHING IN HIS LIFE YOU WANT AS LONG AS YOU HELP OTHER PEOPLE GET WHAT THEY WANT. YOU KNOW, TO UNDERSCORE THIS, BEING A TEENAGE ENTREPRENEUR JUST THINK ABOUT THIS, HE’S 16 YEARS OLD, YOU GOT THIS STORE AND YOU HAVE GIANTS ON EITHER SIDE OF YOU. ONE IS LIKE A BIG CORPORATE SUPERMARKET. THE OTHER ONE IS A BIG CORPORATE CONVENIENCE STORE, CALLED 7-ELEVEN. I BOUGHT THE BUSINESS FOR 7000 IN NOTES, WHICH MEANS I WAS BROKE, BUT THE PERSON YOU WANTED TO SELL IT WANTED TO GET OUT SO BAD HE’S LIKE LET’S GET THE CHANCE — GIVE THE KID A CHANCE BECAUSE IF I DON’T MAKE MY PAYMENTS THEY JUST TAKE THE STORE BACK ANYWAY. >>I MADE MY — DID YOU MAKE YOUR PAYMENTS? >>I MADE MY PAYMENTS BECAUSE I HAD THE VENDORS GIVE ME THE FIRST DELIVERY ON CONSIGNMENT I SAID I WILL NEVER SHOP YOU, I WILL ALWAYS BE LOYAL, I WILL ALWAYS OWE YOU THE FIRST SHIPMENT WHEN I SELL THIS BUSINESS. I NEVER WILL WANT ANYTHING FOR FREE. AND, WHAT I LEARNED QUICKLY IS, YOU HAVE TO EXPAND THE PERIMETER OF WHAT THESE BUSINESSES DO. SO, AT THAT TIME, SOME OF YOU MAY RECOGNIZE PAC-MAN, AND ASTEROIDS, I WENT TO THE MALL AND SAW THESE BIG MACHINES CALLED ASTEROIDS AND PAC-MAN AND I SAW BISCUITS PLUGGING QUARTERS AND I SAID THAT’S A IDEA, WHY DON’T I BUILD A VIDEO GAME ROOM, SO IN THE BACK IT WAS TONY’S VIDEO GAMES I CALLED UP TONY AND I SAID HEY TONY, HOW MUCH FOR THE VIDEO GAME? HE SAID 5000 IS THAT I DON’T HAVE 5000. OKAY, 4500. >>I DON’T HAVE 4500 EITHER. ALL RIGHT, TELL YOU WHAT, YOU PUT THE VIDEO GAMES IN THE STORE, AND WE WILL SPLIT THE QUARTERS. AND IF YOU DON’T MAKE ANY MONEY YOU TO TAKE THEM BACK. LONG STORY SHORT, I HAD TO GET THESE HIGH SCHOOL KIDS TO WALK A BLOCK AND 7:30 11 TO MY STORE. HOW DO YOU DO THAT? I GO DOWN THERE ONE DAY, THE KIDS ARE IN LINE, 40 AT A TIME, THERE’S ONLY FOR INSIDE THE STORE, I SAID WHY ARE YOU ALL WAITING OUT HERE, WHEN IS A BIG STORE IN THERE. THEY SAID THEY THINK WE ARE GOING TO TAKE THINGS. I SAID DON’T WORRY ABOUT THAT, COME DOWN TO MY STORE. >>DID IT TAKE YOUR STUFF? >>I LET THEM IN 40 AT A TIME, NO ONE EVER TOOK ANYTHING. THEY PLAYED VIDEO GAMES AND SO ON, ONE YOUNG PERSON SAID TO ME, AT THE END OF A LONG DAY, BILL, WHEN WE WANT TO HAVE GOOD FOOD, WE TREATED WITH RESPECT. AND PLAY VIDEO GAMES, WE COME TO YOUR STORE. AND WHEN WE WANT TO STEAL STUFF WE GO TO 711. >>[ LAUGHTER ] >>SO, YOU KNOW, YOU TREAT PEOPLE WELL THEY COME BACK TO YOU. >>HOW DID 7-ELEVEN FEEL ABOUT THAT? >>WELL, 711, THEY DID NOT FEEL GOOD, BECAUSE NOW ALL THE KIDS BOYCOTTED THE STORE, AND JUST CAME TO MY STORE INSTEAD. SO, IT BECAME LIKE A LITTLE BIT OF A SOCIAL MOVEMENT, IT WAS REALLY BEAUTIFUL. I REALLY WILL NEVER FORGET THOSE EARLY LESSONS, YOU KNOW, YOU HAVE TO KNOW YOUR CUSTOMER. AND YOU HAVE TO THINK ABOUT WHAT YOU ARE GOOD AT. FOR EXAMPLE, IT WAS A BLUE- COLLAR NEIGHBORHOOD, SO THERE WERE A LOT OF FOLKS LIKE MY DAD WHO WERE BLUE-COLLAR WORKERS, AND THEY WERE FLUSH RICH ON FRIDAY NIGHT WHEN THEY GOT PAID, BUT THEY WERE BROKE BY SUNDAY MORNING, SO WE GAVE THEM CREDIT. AND YOU KNOW, THERE WAS A SENIOR CITIZEN COMPLEX, AND THE SENIORS, WE LEARNED, DIDN’T WANT TO LIVE THEIR HOUSE, SO WE DELIVERED. SO, WE FOUND THINGS TO EXPAND THE PERIMETER OF WHAT OUR LITTLE BUSINESS DID, THAT THE COMPETITION EITHER COULD NOT DO, BECAUSE THEY ARE STRUCTURALLY UNABLE TO DO OR UNWILLING TO DO BECAUSE THEY ARE LAZY. AND, YOU PUT THAT ALL TOGETHER, AND THAT LITTLE STORE DID OKAY. >>SURE. WHEN I THINK OF GIANT ENTERPRISE COMPANIES INCLUDING MAYBE S.A.P. TO SOME DEGREE, I DON’T ALWAYS THINK OF THEM AS COMPANIES THAT FOCUS ALL OF THAT MUCH ON GETTING LOVE FROM CUSTOMERS. I MEAN, >>MAY BE THE BEST WAY TO DESCRIBE LOVE FOR THE CUSTOMER, IS YOU KNOW, IN THE EARLY EXPERIENCE, BECAUSE I WENT FROM BEING THAT TEENAGER ENTREPRENEUR INTO A LARGE COMPANY OF 21, AND, VERY INTERESTING, I WILL NEVER FORGET, THE FIRST DAY, TRYING TO GET A JOB IN A LARGE ENTERPRISE, AND YOU KNOW, I WAS COMING FROM LONG ISLAND, AND I LIVED IN A HOUSE, IN A PARK IN DARIEN RUNNING AROUND THE U.S. RIGHT NOW, THAT FLOODED EVERY TIME, THERE WAS A MAJOR NORTHEAST STORM. I HAD MY $99 SUIT ON, AND I’M BASICALLY TRYING TO GET TO THE CAR, TO GO TO THE RAILROAD TRACKS FOR INTERVIEW, MY BROTHER PICKS ME UP, I’M ON THE FIFTH STEP FROM THE BOTTOM, THAT’S HOW MUCH WATER WAS IN MY HOUSE. PUTS ME ON THE SHOULDER, CARRIES ME TO THE STREET, POURS ME INTO THE CAR, MY DAD DROPS ME OFF AT THE RAILROAD TRACKS, WE RIDE INTO MANHATTAN, AND I’M READING THIS ANNUAL REPORT, FROM THE VAN CEO OF XEROX, IT WAS GOOGLE THEM, OR FACEBOOK AND IT WAS THE COMPANY. THE CEO WANTS TO REINVENT THE COMPANY ON SOMETHING CALLED TOTAL VOLUME MANAGEMENT AND THEIR ISSUE WAS, THEY WERE BUILDING A PRODUCT FOR A HIGHER PRICE POINT DOWN THE COMPETITION WAS SELLING A HIGHER-QUALITY PRODUCT. THAT’S NOT A GOOD BUSINESS MODEL. SO, I DON’T CARE, I’M 21, I’M ZOOMING IN ON THE TRAIN, I GET TO THE HIRING CENTER, TOP OF THE SIXTH IN MANHATTAN, UNLIKE THIS IS MY DAY, RIGHT, MY BIG CHANCE, AND I LOOK, AROUND, AND I REMEMBER THE LINE BEFORE I LEFT, FOR NEW YORK CITY, SITTING NEXT TO MY DAD, I LOVE MY DAD I SAID DAD, I GUARANTEE YOU I’M COMING HOME TONIGHT WITH MY EMPLOYEE BADGE IN MY POCKET MY DAD SAID BILL, DON’T PUT THAT PRESSURE ON YOURSELF, JUST DO YOUR BEST. >>WHAT GAVE YOU THAT CONFIDENCE? >>I HAD TO GET THE JOB. WHEN YOU HAVE TO DO SOMETHING, I ALWAYS FOUND THE BEST WAY TO DO IT IS PUT YOURSELF IN A POSITION WHERE YOU VISUALIZE IT HAPPENING. AND, YOU BELIEVE IT, AND WHEN YOU BELIEVE IT, YOU OFTEN CAN ACHIEVE IT. SO I GOT THERE AND I’M LOOKING AROUND THIS ROOM, LIKE THESE FOLKS FROM PRINCETON, NEW JERSEY, CONNECTICUT, WENT TO THE BEST SCHOOLS ON EARTH, AND I’M IN THERE WITH MY $99 SUIT FROM LONG ISLAND, HAVING GROWN UP WITH A LITTLE BUSINESS AND I THINK TO MYSELF I THINK I MIGHT HAVE OVERSHOT IT A LITTLE BIT WITH MY DAD HERE, YOU KNOW. BUT, I LOOK AROUND, BEAUTIFUL WOMEN AND MEN LIKE YOURSELVES, AND I’M TRYING TO FIGURE OUT WHAT I’M GOING TO DO. DO YOU PANIC BECAUSE THEY’RE SO GOOD? OR, DO YOU JUST PLAY TO YOUR STRENGTHS. AND I TALKED TO 500 PEOPLE A DAY IN THE DELI SO I’M LIKE HEY, WHAT ARE YOU IN FOR, WHAT ARE YOU TRYING TO ACCOMPLISH, WHAT IS YOUR GOAL, THEY WOULD SAY THINGS LIKE, I’M PLAYING THE FIELD, I’M INTERVIEWING AT GOLDMAN AND MORGAN AND IBM AND SO ON, AND YOU KNOW WHAT HAPPENS THEN? I GOT MY SUPERPOWER. YOU KNOW WHY? BECAUSE I REALIZED, I WANTED IT SO MUCH MORE THAN THEY WANTED IT. AND I GO THROUGH THE MAJOR INTERVIEWS THAT DAY, I THINK IN THE NINTH WHEN I GET INVITED TO NINE W. 57th, AND THE CEO BASICALLY IS WAITING FOR ME, IN HIS OFFICE. I THINK THAT THEY FORGOT ABOUT ME AND ANOTHER CANDIDATE WERE SITTING ON A BENCH, AND I STAND UP, JoANNE SICILIANO IS THE ASSISTANT AND I SAY I JUST WANT MISTER FULLER TO KNOW I AM HERE, AND I WILL STAY ALL NIGHT, I JUST WANTED TO BE AWARE OF THAT. I GET INVITED INTO HIS OFFICE, GREAT OFFICE. CENTRAL PARK, 30th FLOOR, I LOOK OVER HIS SHOULDER, AS I AM GOING INTO THE DOORWAY, AND I REALIZED, I WAS NOT IN FOR AN INTERVIEW, I WAS IN FOR THE FIGHT OF MY LIFE, BECAUSE IF I GET THE JOB, I CHANGE THE TRAJECTORY OF MY LIFE. WE HAVE A GREAT MEETING AND AT THE END HE SAYS TO ME, BILL, IT’S VERY INTERESTING, REALLY ENJOYED MEETING YOU, VERY PASSIONATE YOUNG MAN, AND THEN YOU KNOW WHAT HE SAID? THE HR DEPARTMENT WILL BE IN TOUCH. YOU HAVE A THAT ONE BEFORE? AND I SAID, I DON’T THINK YOU COMPLETELY UNDERSTAND THE SITUATION, SIR. AND HE LOOKS AT ME, HEAD TILTED, WHAT’S THIS KID UP TO, AND I SAID, I NEVER BROKE A PROMISE TO MY DAD IN 21 YEARS, AND I GUARANTEED HIM, I WOULD HAVE MY EMPLOYEE BADGE IN MY POCKET TONIGHT. NOW HE’S REALLY TILTING. HE SAID BILL McDERMOTT, AS LONG AS YOU HAVE NOT COMMITTED ANY CRIMES, YOU’RE HIRED. I SAID I CERTAINLY HAVE NOT COMMITTED ANY CRIMES, ARE YOU SURE? AND HE GOES YESTERDAY SO I WALK AROUND THE TABLE >>BUT THOSE PEOPLE AT 7-ELEVEN, YOU PUT THEM ON. >>I WALK AROUND THE TABLE, AND I BEAR HUG HIM A LITTLE BIT, PLACE THEM SAFELY BACK IN HIS CHAIR, I SHOOT PAST THE RECEPTIONIST I GO DOWN 38 FLOORS, I AM NOW IN FIFTH AVENUE, I RUN TO SIXTH AVENUE, AND THEN YOU HAD TO PUT QUARTERS AND PHONES, A VERY INTERESTING TIME, IT SEEMS LIKE 1 MILLION YEARS AGO, I CALL UP MY MOM AND DAD AND I SAID MOM AND DAD, BREAKOUT THE KORBEL, WE GOT THE JOB. AND FOR THOSE OF YOU THAT DON’T KNOW, IT’S LIKE THE WORST CHAMPAGNE IN THE WORLD. BUT, IT IS LONG ISLAND KRISTOFF.>>WHAT WOULD YOU HAVE DONE IF YOU HADN’T GOTTEN THE JOB, WOULD YOU HAVE GONE BACK TO THE DELI AND DONE THAT? >>IS A GREAT QUESTION. A LOT OF PEOPLE SAY, WOULD YOU HAVE OPENED UP A CHAIN? WOULD YOU HAVE DONE THINGS LIKE THAT? I NEVER WANTED TO DO ANYTHING OTHER THAN LEAD. AND, MY ENJOYMENT AND LEADERSHIP IS RUNNING ORGANIZATIONS WITH LOTS OF PEOPLE, AND DOING VERY EXCITING THINGS. I BELIEVE STRONGLY IN THE POWER OF INNOVATION, I LOVE THE SOFTWARE INDUSTRY MORE THAN ANYTHING IN THE WORLD, I AM DOING MY DREAM JOB. SO, I WANTED TO BE IN A BIG COMPANY, I DID NOT WANT TO BE AN ENTREPRENEUR OPENING UP A CHAIN OF DELIS. I ADMIRE PEOPLE WHO DO THAT, IT IS JUST THAT WAS NOT MY GOAL. >>LET’S JUMP FORWARD A LITTLE BIT. BY 2014, YOU ARE CEO OF S.A.P., HOW DID THAT COME ABOUT, HE SPENT SOME TIME AS CO-CEO, AND IS IS A GERMAN FIRM THAT NEVER HAD AN OUTSIDER ON THE COMPANY. >>IT’S REALLY IMPORTANT, TRUST IS THE HUMAN CURRENCY, THAT’S WHAT I SAID IN MY DREAM, IT’S REALLY IS IN THE END OF THE ULTIMATE HUMAN CURRENCY, BETWEEN HUMANS IS TRUST. I CAME IN IN 2002, INTO THE AMERICAS, AS THE CEO OF SEP — S.A.P. AMERICA. S.A.P. AMERICA HAD MISSED 24 QUARTERS IN A ROW. >>WHY? >>THEY HAD — THE COMPANY GLOBALLY HAD A VERY GOOD BRAND, AND A WONDERFUL PRODUCT, BUT IN AMERICA, THEY HAD FIVE CEOS IN SIX YEARS. THERE WAS A LOT OF TURNOVER. IN THE VALLEY, THERE WAS TREMENDOUS INNOVATION GOING ON, AND MANY OF THE BEST PEOPLE JUST LOST CONFIDENCE IN THE AMERICAN OPERATION AND LEFT. SO, WHAT YOU HAD LEFT OVER WAS MEDIOCRITY. BUT, THE BIGGEST ISSUE WAS, THEY LOST THE VIEW OF WHERE THE CUSTOMER NEEDED TO GO. AND, EVERYTHING BECAME ABOUT THE PRODUCT. AND IF YOU HAVE A PRODUCT LOOKING FOR A PROBLEM, THERE IS A REAL ISSUE WITH THE WAY YOU ARE RUNNING YOUR BUSINESS. WHAT I TRY TO DO IS BUILD A GREAT MANAGEMENT TEAM, PEOPLE THAT HAD AN ORIENTATION AROUND AUDACIOUS GOALS, AND A LOVE FOR PEOPLE AND A DESIRE TO DO AMAZING THINGS FOR THE CUSTOMER , AND THE ONLY WAY TO PULL THAT OFF IS TO HAVE AN OUTSIDE INTERVIEW WITH THE WORLD. AND AT THAT TIME, WE MOVED FROM A PRODUCT CENTRIC ORGANIZATION, TO A SOLUTIONS AND VALUE DELIVERY ORGANIZATION. IT DID NOT MATTER IF IT WAS NOT SOLVING A BIG PROBLEM FOR THE CUSTOMER, AND THEIR CUSTOMER, AND IT DID NOT MATTER IF YOU COULD NOT QUANTIFY THE VALUE IT DELIVERED TO THE EXECUTIVES TRYING TO RUN COMPANIES. SO, THAT CHANGE LED TO 70 PERCENT GROWTH, WE WENT FROM NUMBER THREE IN THE ENTERPRISE APPLICATION SOFTWARE INDUSTRY, TO NUMBER ONE, AND WE PULLED THAT OFF IN ABOUT 15 MONTHS, AND THE ORGANIZATION WENT ON A GROWTH TEAR THAT LED TO THE WORLDWIDE FIELD JOB AND THEN ULTIMATELY THE CEO JOB IN 2010. AND THEN THE SOUL CEO JOB OF 2014. HERE IS THE BIG IDEA. YOU ALL REMEMBER THE FINANCIAL CRISIS OF 2008, RIGHT? OR AT LEAST, IF YOU DIDN’T LIVE IT, YOU READ ABOUT IT. 2009 WAS LIKE A SLOW RECOVERY IN 2010, I COME IN AS CEO, AND AT THAT TIME, ANALYZE THE SITUATION VERY CAREFULLY. SO, WE WERE THE NUMBER ONE COMPANY IN BUSINESS SOFTWARE, ALSO, IN ANALYTICS. BUT, AS YOU KNOW, THE MARKET WAS GOING TO EVOLVE VERY QUICKLY, AND THIS IDEA OF DIGITAL TRANSFORMATION WAS AT ITS EARLY STAGE, BUT IT WAS COMMON, LIKE A TSUNAMI. SO, WE KNEW BIG DATA, THAT’S WHY WE INVENTED HANA, WE KNEW THE NEW ERP WOULD HAVE TO BE BASED UPON IT IN MEMORY, DATABASE, THAT HANDLE STRUCTURE, TRANSACTIONAL DATA, AND, HAD ANALYTICS ON THE SAME PLATFORM FOR UNSTRUCTURED DATA. AND WE KNEW THAT ELASTIC CLOUD COMPUTING WAS ABSOLUTELY THE FUTURE, WHICH IS WHY WE BUILT A STRATEGY AROUND THE LINE OF BUSINESS CLOUD AND BUSINESS NETWORK, BECAUSE THE NETWORK OF THE NETWORK EFFECT IS WHAT IS DRIVING MASSIVE VALUE. TRILLIONS IN VALUE IN THE GLOBAL ECONOMY, AND AT THAT TIME, WE CONCEIVED THIS STRATEGY OVER A TWO-WEEK PERIOD. AND THEN, WE BEGAN TO EXECUTED AND HAVE BEEN DOING THAT NOW, FOR BELIEVE IT OR NOT, 10 YEARS. >>STILL THE SAME STRATEGY? IS BUDGET EVOLVED, IT HAS EVOLVED, BUT IT IS BASICALLY ON THE SAME PARAMETERS, THAT WE PROPOSED THEM. HERE IS FOR THE ENTREPRENEURS OUT THERE, WE HAD AN ADDRESSABLE MARKET IN 2010, AND THAT IS A GREAT MARKET. BUT, IF YOU SPEND YOUR TIME ENJOYING TODAY, FOCUSING ON WHAT YOU USED TO BE, YOU ARE LIKELY TO MISS TOMORROW, AND YOU’RE LIKELY NOT TO FOCUS ON WHAT YOU SHOULD BE. AND BY DOING THIS, WE INCREASE FROM 110, TO KNOW ONE AND 400 BILLION. THAT IS NOT COUNTING THE U.S. NETWORK WHERE WE HAVE $1 TRILLION TRAVELING TO THAT NETWORK. THE MAIN IDEA FROM MY PERSPECTIVE IS DUE WHAT YOU ARE GREAT AT, STAY TO YOUR CORE, BUT LOOK FOR WAYS TO EXPAND THE PERIMETER, IN THE INTEREST OF SOLVING THE ALBUMS FOR CUSTOMERS , SO THAT THEY CAN BETTER SERVE THEIR CUSTOMERS, WHICH BRINGS US TO THE NEXT PHASE OF THE STRATEGY WHICH WE ARE ON NOW. >>ABSOLUTELY. TALK ABOUT EXPANDING THE PERIMETER, YOU JUST SPENT REALLY BIG MONEY, OVER $8 BILLION, THAT IS SERIOUS MONEY FOR A COMPANY THAT WAS NOT MAKING THAT MUCH REVENUE AT THE TIME. WHY DO THAT? WHAT DOES THAT GIVE S.A.P.? >>YOU KNOW, ONE OF THE MAIN THINGS IN THE BUSINESS OF LEADERSHIP, IS JUDGMENT. AS WE WENT ON A BIT OF A SHOPPING SPREE, FOR LINE OF BUSINESS CLOUD AND BUSINESS NETWORK CLOUD. >>WHY DID YOU GO ON A SHOPPING SPREE? >>BECAUSE OUR CUSTOMERS NEEDED US TO. IF YOU LOOK AT OUR BUSINESS COME IN 2010, WE HAD A ZERO CLOUD REVENUE. IN 2023, WE ARE TALKING ABOUT A $15 BILLION CLOUD BUSINESS. 2024 WE COULD EAT 20 AND BEYOND IN THE CLOUD. SO, HAD WE NOT MADE THOSE DECISIONS THEN, STRATEGICALLY, YOU WOULD SAY TO YOURSELF, MAN, WHAT WOULD HAVE HAPPENED. BECAUSE, TODAY, 80 PERCENT OF OUR REVENUES COME FROM BUSINESSES WE WEREN’T IN FIVE YEARS AGO. THINGS HAVE CHANGED AND THEY ARE CHANGING REALLY REALLY QUICKLY. I TELL PEOPLE ALL THE TIME. CHANGE IS, LIKE, UNBELIEVABLY FAST. WE ALL FEEL IT. BUT, REMEMBER FOLKS, THE WORLD WILL NEVER MOVE THIS SLOW AGAIN. THAT IS THE KEY. IN TERMS OF QUAL TRACKS. HERE’S THE IDEA, IF YOU THINK ABOUT THE ECONOMY WE ARE IN NOW, WE ARE IN THE EXPERIENCE ECONOMY. THE IDEA OF CREATING EXPERIENCES FOR PEOPLE, THIS ISN’T JUST ABOUT SOFTWARE AND TECHNOLOGY, THIS IS ABOUT THE HUMAN EXPERIENCE. WHETHER YOU ARE SERVING EMPLOYEES IN YOUR COMPANY, MAKING THEIR LIFE SIMPLE AND BETTER, OR, YOU ARE SOLVING PROBLEMS FOR YOUR CUSTOMER, AND THEIR CUSTOMER. IT HAS TO BE SIMPLE. AND, THE EXPERIENCE HAS TO BE BEAUTIFUL. >>IS THAT TRUE FOR ALL S.A.P. PRODUCTS TODAY? >>LET’S TAKE IT ONE STEP AT A TIME. OF COURSE NOT. >>GOOD, BECAUSE WE GOT SOME EXAMPLES FOR YOU. >>OF COURSE NOT. BUT, LET’S TAKE IT ONE STEP AT A TIME, BUT THE IDEA IS THAT S.A.P. HAS IMMENSE AMOUNTS OF OPERATIONAL DATA. WE RUN THE BIGGEST BUSINESSES IN THE WORLD WITH 450,000 CUSTOMERS RUNNING S.A.P.. WE KNOW WHAT IS GOING ON . I CALL THAT OPERATIONAL DATA. WHAT EVERYONE NEEDS TO GET IN TOUCH WITH IS X DATA, OR EXPERIENCE DATA. WITH THINGS REALLY MATTER TO THE CUSTOMER. WHEN YOU CAN COMBINE YOUR EXPERIENCE AND OPERATIONS, AND YOU CAN DO THAT ON THE S.A.P. PLATFORM, YOU CAN FUNDAMENTALLY CHANGE THE WORLD. SO, THAT WAS THE IDEA BEHIND OUR PURCHASE AND THAT IDEA IS FUNDAMENTALLY CHANGING EXPERIENCES FOR PEOPLE. I HOPE YOU AGREE WITH THE STRATEGY, AND ALREADY, THE SIGNS ARE TRANSFORMATIONAL. SO, IF YOU THINK ABOUT THE IDEA OF APPLE, YOU KNOW, AND THEIR ACQUISITION OF NEXT, THINK ABOUT HOW THAT TRANSFORMED APPLE AND BROUGHT STEVE JOBS BACK TO THE COMPANY. IF YOU THINK ABOUT EMC AND THEIR ACQUISITION OF VMWARE, AND HOW THEY CHANGED THAT, YOU THINK ABOUT FACEBOOK AND INSTAGRAM, THIS IS TO S.A.P. WHAT THOSE MOVES WERE TO THOSE WONDERFUL COMPANIES. AND I BELIEVE THIS IS THE NEW FRONTIER. >>THAT IS PRETTY BOLD. >>TOTALLY. YOU ARE BASICALLY BETTING THE COMPANY ON QUALTRIX? >>THE COMPANY ISN’T BET ON QUALTRIX. THE FUTURE IS BAD ON WHAT THE CUSTOMERS CUSTOMER IS GOING TO NEED. I BELIEVE THIS IS THE ELECTED TO SERVE THE CUSTOMER, WE ARE FINANCIALLY ACCESSIBLE AT THE COMPANY, BUT, IT IS OUR STRATEGY TO KEEP S.A.P. THE FASTEST GROWING SOFTWARE COMPANY IN THE WORLD WHICH WE ARE NOW. >>YOU HAVE GONE FROM A MARKET CAP OF 40 BILLION TO 150 BILLION, IT DEPENDS ON THE DAY WITH MARKET VOLATILITY. >>NOT THAT I’M WATCHING IT. >>BUT YOU ARE. >>OF COURSE. YOU SHOULD, YOU SHOULD KNOW WHAT’S GOING ON AT ALL TIMES. >>THERE ARE SOME CEOS WHO WOULD SAY I’M NOT PAYING ATTENTION TO IT. >>THEY SHOULD PAY ATTENTION. YOU KNOW WHY? A LOT OF PEOPLE COUNT ON YOU TO PAY ATTENTION. WHETHER IT IS YOUR EMPLOYEES, ALL OF OUR EMPLOYEES NOW, SHAREHOLDERS OF THE COMPANY, OR IT IS SHAREHOLDERS, OR IT IS JUST CUSTOMERS, YOU UNDERSTAND HOW IT WORKS. SO, WINNING IS SOMETHING YOU FUNDAMENTALLY HAVE TO PAY CLOSE ATTENTION TO. IT IS OUR MEASURE THAT IS A SCOREBOARD, WATCHING THE SCOREBOARD, I WOULD HOPE THEY ARE. >>ANOTHER FOUR OR FIVE YEARS FROM NOW, DO YOU WANT TO BE A 300 BILLION? >>I BELIEVE STRONGLY THAT WE HAVE STRONGLY QUADRUPLED THE MARKET CAP FOR THE COMPANY IN THE 10 YEAR WINDOW, I THINK THERE IS NO QUESTION THAT WILL HAPPEN THE MORE IMPORTANT THING, IS WE HAVE QUINTUPLED THE NUMBER OF CUSTOMERS WE ARE SERVING. YOU HAVE SUPER INSPIRED EMPLOYEES HOW DO YOU MAINTAIN THAT, AND THEN THIS EMPATHY ACROSS EVERY EMPLOYEE IN THE COMPANY WITH THAT MINDSET, IS FOCUSED ON THE OUTSIDE INTERESTS, THEIR CUSTOMERS AND THEIR CUSTOMERS, HOW IS THAT A CONSISTENT FEELING, THAT IS WHY WE LOVE THE STARTUP COMMUNITY SO MUCH AND PUT SO MUCH INTO IT, AND WHEN WE WELCOME ANYTHING WE CAN DO WITH ALL THE INNOVATORS IN THIS ROOM TODAY. BECAUSE, OUR COMPANY, JUST LIKE IN EVERY OTHER COMPANY DOES NOT HAVE ALL THE ANSWERS. IT IS HOW WE PUT IT TOGETHER, IN SOLUTIONS THAT REALLY MATTER >>AS YOU ARE DOING THAT, CAN YOU DO ME A FAVOR? CAN YOU FIX CONCUR, BECAUSE IT IS JUST SO HORRIBLE TO USE. >>[ LAUGHTER ] >>THAT IS INTERESTING. I’M VERY HAPPY, IF YOU FEEL THERE IS SOMETHING WE CAN DO WITH CONCUR, TO MAKE IT BETTER. THAT IS PART OF HAVING EMPATHY. IF SOMEONE SAYS SOMETHING, THAT YOU DON’T NECESSARILY WANT TO HEAR, THAT IS THE TIME WHEN YOU SHOULD PIQUE YOUR INTEREST AND REALLY LISTEN AND LEARN AND DO SOMETHING ABOUT IT. I DO WANT TO SAY, IN FAIRNESS TO CONCUR, SINCE YOU MENTIONED IT, I HAVE HEARD GREAT THINGS ABOUT CONCUR, TOO, SO WHATEVER YOUR ISSUE IS, I WOULD LIKE TO TAKE THAT UP WITH YOU, OKAY? >>OKAY, LET’S DO IT BACKSTAGE. >>THANKS EVERYBODY, GOOD BEING WITH YOU. >>THANK YOU. >>THANK YOU. >>WE ARE STILL TALKING BACK THERE ABOUT THE MERITS OF CONCUR. OKAY. QUICKLY, THERE IS SOME GREAT STORYTELLING JUST NOW BY BILL, IF YOU ARE INTERESTING IN CHECKING OUT THE TRANSCRIPT YOU CAN CHECK OUT WWW.OTTER/AI/TC ENTERPRISE POINT NOW SIT BACK WITH A DISCUSSION ABOUT HOW KUBERNETES CHANGED EVERYTHING WITH OUR PANELIST BRANDON BURNS, EDISON WAS ENGINEER AT MICRO SOFT, TIM HAWKING, A PRINTABLE SOFTWARE ENGINEER AT GOOGLE, JIM BEDA, PRINCIPAL ENGINEER AT VMWARE, AND APARNA SINHA, WITH DIRECTOR RON MILLER.>>WELCOME EVERYONE, COMMUNITIES, OPEN-SOURCE CONTENDER ARBITRATION TOOL I’M NOT TELLING YOU ANYTHING YOU DON’T KNOW. WE HAVE DISTINCT INDIVIDUALS HERE TO DISCUSS KUBERNETES WITH US, THE FOURTH WHO HELPS GUIDE GOOGLE’S VERSION OF KUBERNETES TODAY. LET’S START WITH YOU, JOSEPH YOU HAVE TO BE NEXT TO ME. WHY DO YOU THINK IT HAS BECOME SO POPULAR SO QUICKLY? >>IT’S BEEN FIVE YEARS THAT’S PRETTY QUICK. I THINK THERE ARE A LOT OF FACTORS AND I THINK, YOU KNOW, ANYTIME YOU LOOK AT A FACTOR LIKE THIS, ANYTIME YOU LOOK AT THE REASONS WHY SOMETHING SUCCEEDS AND FAILS, I THINK AT THE RIGHT TIME, I THINK BRANDON LIKES TO SAY BASED ON THE EXPERIENCES AT GOOGLE, WE KNEW WE HAD THE PICTURE ON THE FRONT OF THE PUZZLE BOX, RIGHT? WE HAVE THE IDEA OF HOW ALL THIS STUFF FIT TOGETHER, AND I THINK, YOU KNOW, JUST COMMUNITY. BOTH IN TERMS OF THE FOLKS THAT HAVE CONTRIBUTED, BUT ALSO WE WERE ABLE TO GET ALL THREE MAJOR CLOUD PROVIDERS ON BOARD WITH COOPER NOTICE — WITH KUBERNETES. SO BEING ABLE TO BRING THAT ALTOGETHER WAS A BIG PLUS, TOO. >>I THINK ALSO THE JOB OF DEVELOPING SOFTWARE IS TOO HARD, DEVELOPING AND OPERATING SOFTWARE IS TOO HARD, SO THERE IS A NEED, THIS VERY STRONG NEED, I THINK SUCCESS IS PARTLY PART OF ALL THE THINGS WE BRING TO THE TABLE BUT ALSO THE STRONG DEVELOPER NEED THAT IT COULD FIT. THERE IS STILL A LOT MORE WORK TO DO THERE. >>YEAH. >>I THINK IT’S BACK TO THE PROBLEMS THAT PEOPLE WERE REALLY HAVING, IT BROUGHT THEM A NEW ABSTRACTION THAT WAS MUCH MORE PLEASANT TO USE, AND, IN THE RIGHT TIME YOU CAN’T OUTWEIGH THE BENEFITS OF BEING IN THE RIGHT PLACE AT THE RIGHT TIME WITH THE RIGHT IDEAS. >>YEAH, I WOULD SAY BUILDING ON WHAT JOE SAID, WITH THE HERITAGE WORK FROM GOOGLE, BUT ALLOWED US TO STAND ON THE SHOULDERS OF GIANTS, BUT BEYOND THAT, I THINK THAT THE COMMUNITY REALLY INVESTED IN THE STAPLE, MAKING SURE THERE WAS A CONFORMANCE PROGRAM THAT HAD LONGEVITY, AND THAT IT WAS MODULAR SO THAT THERE WAS AN ECOSYSTEM THAT EVOLVED AROUND IT AND PROVIDED BUSINESS OPPORTUNITIES FOR EVERYONE. >>YOU KNOW, YOU MENTIONED THAT YOU HAD A KIND OF HEAD START, RIGHT? BECAUSE YOU WERE DOING IT INSIDE OF GOOGLE. BUT, IT MUST HAVE BEEN A HUGE CHALLENGE TO CREATE THIS, TAKE IT FROM AN INTERNAL TOOL TO A MORE GENERAL APPLICATION, PEOPLE DIDN’T HAVE A TEAM OF GOOGLE ENGINEERS TO RELY ON. WHAT WAS THAT LIKE? >>I THINK IT WAS A CLEAN ROOM IMPLEMENTATION, RIGHT? INSPIRED BY, BUT NOT — IT WAS BUILT FROM SCRATCH WITH PUBLIC CLOUD IN MIND. JOE AND I WERE BOTH WORKING ON PUBLIC CLOUD AND HAVE BEEN THINKING A LOT ABOUT HOW PEOPLE LEARNING TO USE TOOLS AND HOW TO BRING THEM INTO THAT WORLD. I THINK WE WERE ALSO SUPER LUCKY WITH WHAT WAS REALLY INSTRUMENTAL EARLY ON WE WERE SUPER LUCKY TO HAVE THE RED HAT FOLKS JOIN US, AND SAY HEY YOU KNOW, THE REAL WORLD LOOKS LIKE THIS KIND OF EXPERIENCE THAT THEY BROUGHT TO THE TABLE. YOU KNOW, CLAYTON COLEMAN IN PARTICULAR, AND OTHERS WERE REALLY INSTRUMENTAL. IN I THINK MAKING IT APPROACHABLE. YEAH. I TAUGHT CS 101, THAT HELPED, TOO. >>THERE WAS A LOT OF SKEPTICISM INSIDE OF GOOGLE EARLY ON WITH KUBERNETES. WHY DO WE NEED THIS? I HOPE THE GOOGLE OF TODAY HAS CHANGED AND REALLY RECOGNIZED THE GAP BETWEEN HOW GOOGLE OPERATES, WHAT KIND OF INSTRUCTOR THEY NEED, AND SORT OF WHAT DOES THE REST OF THE WORLD NEED. >>EXACTLY. >>I THINK EARLY ON THERE WAS A LOT OF FOCUSING ON SCHEDULING IS A PROBLEM AND HONESTLY IT’S LIKE THE LEAST INTERESTING PART OF KUBERNETES. LIKE HOW DO YOU EMPOWER DEVELOPERS IS THE MOST INTERESTING PART. >> I THINK A BIG FACTOR IS THE INTERACTION WITH THE USER BASE WHICH REALLY LED TO MANY OF THE ENTERPRISE CLASS FEATURES. SO, YOU KNOW, WE HAD A LOT OF FEEDBACK THAT WE NEEDED A MORE ROBUST STORAGE INTERFACE, WE HAD A LOT OF FEEDBACK THAT WE NEEDED A SECURITY STORY, WHICH IS NOW MUCH BETTER FLUSHED OUT, ALSO FEEDBACK THAT WE NEEDED A STORY, SO THOSE ARE AREAS WHERE THE USER DIRECTLY CONTRIBUTED. >>FROM THE VERY EARLY DAYS WHEN YOU LOOK AT WHAT KUBERNETES WAS, IT WAS FOCUSED ON THE CLOUD EXPERIENCE, AND TRYING TO MEET CUSTOMERS AND USERS WITH WHERE THEY WERE WITH WHAT SOFTWARE IS DOING TODAY, SO FOCUS ON OFF-THE-SHELF — OFF-THE-SHELF OPEN-SOURCE SOFTWARE, THESE ARE VERY DIFFERENT THAN THE THINGS WE DO INSIDE. >>RIGHT. YOU MENTIONED IT IS MORE SECURE BUT WHEN I WAS IN BARCELONA, IN MAY, I WAS HEARING ABOUT ISSUES WITH CONTAINER SECURITY THAT THERE WAS A LACK OF MATURITY THERE. SO, I AM WONDERING, DO YOU GUYS THINK, DO CONTAINERS HAVE A SECURITY PROBLEM, AND HOW DOES THE COMMUNITY DEAL WITH THAT? >>SECURITY IS A JOURNEY, NOT A DESTINATION. RIGHT? IT’S NOT A BINARY THING. DO WE HAVE A PROBLEM? I DON’T THINK WE HAVE A PROBLEM ANY MORE THAN LENNOX HAS A SECURITY PROBLEM, RIGHT? IS IT AS GOOD AS IT COULD BE? OF COURSE NOT. THERE IS A LOT OF WORK TO DO, PEOPLE ARE DOING INTERESTING INNOVATIVE WORK WITH BARRIERS, A LOT OF PEOPLE APPROACHING IT WITH DIFFERENT PERSPECTIVES WHICH I THINK IS FANTASTIC. WE WILL CONTINUE TO ITERATE ON THIS FOREVER, UNTIL KUBERNETES IS NO MORE. >>I THINK AS TIM SAID IT IS A PURPOSEFULLY INTEGRATED SYSTEM WHICH IS DIFFERENT THAN WHAT OTHER PEOPLE RUN ACROSS WE RUN INTO BY ENVIRONMENTAL AT THE TIME FOR EXAMPLE ONLY CERTAIN PEOPLE HAVE PERMISSIONS TO CREATE A LOAD BALANCER. YOU CANNOT CREATE A KUBERNETES CLUSTER WITHOUT CREATING A LOAD BALANCER’S AND NOW BY DEEPLY INTEGRATING WITH THE CLOUD YOU HAVE FORCED PEOPLE WHO HAD SECURITY BY SEPARATING WORLDS NOW YOU ARE FORCING A DEVELOPER TO EXPOSE SOMETHING ON THE INTERNET AND HOW TO DO THAT SAFELY. IT’S NOT A PROBLEM, THERE ARE JUST DIFFERENCES. >>I THINK, ANY ENGINEERING SYSTEM, THERE IS TRADE-OFFS. I THINK YOU TAKE A DIFFERENT APPROACH AND A DIFFERENT THREAT MODEL, WHEN YOU ARE BUILDING LIKE A PUBLIC CLOUD, YOU ARE INVITING HOSTILE ACTORS TO COME RIGHT NEXT TO OTHER WORKLOADS, FOR INSTANCE WHEN YOU ARE BUILDING SOMETHING FOR ENTERPRISE AND YOU ARE WORRIED ABOUT DEVELOPMENT TEAM TO STEPPING ON EACH OTHER’S TOES. AND I THINK THAT THERE ARE DIFFERENT SOLUTIONS FOR THOSE DIFFERENT PROBLEMS. I THINK THE OTHER THINGS IS ONE OF THE THINGS THAT HAS MADE COMMUNITIES ARE SUCCESSFUL IS THAT IT IS VERY SUCCESSFUL. I THINK IT IS SIMILAR TO THE LENNOX COLONEL IN THAT CASE, THE LINUX KERNEL RUNS ON FROM A CELL PHONE ALL THE WAY UP TO A MAINFRAME, IT IS AN INCREDIBLE PIECE OF TECHNOLOGY THAT IT CAN WORK IN ALL OF THOSE SITUATIONS. COMMUNITIES — KUBERNETES IS VERY SIMILAR IN ALL OF THESE WAYS, EVERYTHING FROM PUBLIC CLOUD TO EDGE, TWO PEOPLE ARE DOING OTHER CRAZY THINGS WITH IT, AND WITH THAT FLEXIBILITY COMES A LOT OF CHOICE. AND THAT MEANS THERE ARE WAYS TO RUN IT INSECURE, THAT IS PART AND PARCEL OF THE FLEXIBILITY. >>I THINK IF YOU LOOK AT WHEREF PROGRESS IN THE LAST TWO YEARS. THERE WAS A TIME WHEN IT WAS ABACK BASED, AND THEN RBACK, AND THAT WAS THE FIRST STEP. BUT THERE’S BEEN A LOT OF PROGRESS MADE SINCE THEN.>>IN TERMS OF YOU WITH FDO AND YOUR FLAVOR OF KUBERNETES, DO YOU THINK THE VENDOR ECOSYSTEM IS FILLING UP AROUND IT? IS THAT ADDRESSING IT IN WAYS THAT MAYBE THE GENERAL, OPEN-SOURCE PROJECT HASN’T? HOW DO YOU SEE IT?>>SPECIFICALLY SECURITY?>>YEAH.>>YEAH, I THE MODULARITY, IS AN OPPORTUNITY FOR PEOPLE TO COME IN AND SAY I HAVE OPPORTUNITIES AT THIS LAYER OR THIS LAYER. AND YOU CAN APPROACH THE PROBLEM IN DIFFERENT WAY. AND THERE’S A ROBUST ECOSYSTEM OF COMPANIES DOING SECURITY, AND A MILLION OTHER THINGS, WITH KUBERNETES’ ECOSYSTEM AND MECHANISM WHICH IS WE’LL CONTINUE TO BUILD. WE HAD THIS CONVERSATION EARLY. FOR EVERY DOLLAR A VENDOR MAKES ON KUBERNETES, THERE’S GOTTA BE A $100 IN THE ECOSYSTEM.>>YEAH, THE ECOSYSTEM IS VERY PURPOSEFUL. AND I DON’T THINK IT’S A CRITICISM TO SAY THAT IT’S GOOD THAT THE ECOSYSTEM IS DEVELOPING SOLUTIONS TO THESE PROBLEMS. IT’S INTENTIONAL. WE WANT TO PUT THE HOOKS IN THE RIGHT PLACE. EVEN THE OPEN-SOURCE PROJECTS WE’RE WORKING ON AROUND POLICY WITH THE OPEN POLICY AGENTS, THEY COME IN THROUGH ADMISSIONS CONTROLLERS. I DON’T HAVE TO GO TALK TO EVERY KUBERNETES INSTALL TO INTEG TRAIT INTO THEIR PLATFORM. IT JUST WORKS WITH THIS EXTENSION HOOK THAT’S ALREADY THERE.>>AND THERE WAS AN EVOLUTION, I THINK. CERTAIN THINGS HAVE BECOME STANDARD. THERE ARE CERTAIN SECURITY DEFAULTS, WHICH EVERYONE USES, AND THEN THERE ARE AREAS THAT ARE STILL EVOLVING. LIKE WHAT DO YOU DO FOR NETWORK POLICY, WHAT DO YOU USE FOR OTHER TYPE WAS SERVICE APPROXIMATELIES? THAT’S, SERVICE POLICIES? THAT’S AN AREA OF INNOVATION.>>FIVE YEARS ISN’T A LONG TIME, RIGHT?>>IT’S TRUE. IT’S BEEN A BLUR.>>FOR SURE.>>SO THE ECOSYSTEM, AND HOW THAT HELPS, IT FITS REALLY NEATLY INTO MY NEXT QUESTION. AS KUBERNETES HAS INCREASED IN POPULARITY, IT’S GIVEN RISE TO THIS ECOSYSTEM, INCLUDING YOUR COMPANY, WHICH WAS SOLD TO THE MWARE. AND YOU KNOW, ALL OF THESE DIFFERENT FLAVORS OF KUBERNETES LOOK LIKE THEIR COMPANIES VERSION. WHEN YOU CREATE THESE COMPANIES ON TOP OF THAT OPEN-SOURCE PROJECT, HOW DO THESE COMPANIES HELP REDUCE THE COMPLEXITY OF SOMEBODY THAT’S KIND OF DOWNLOADING THAT FAKE PROJECT? HOW DO YOU GET PEOPLE GOING WHEN MAYBE THEY COULDN’T?>>I DON’T KNOW. I THINK THERE’S A WHOLE BUNCH OF FLAVORS IN THE ECOSYSTEM, RIGHT? SOME OF THEM ARE MONITORING COMPANIES WHO CAN COME AND SAY HEY, LOOK, TAKE THIS FILE, INSTALL IT INTO YOUR CLUSTER. AND EVERY DEVELOPER HAS SEARCHABLE LOGGING. YOU DIDN’T TEACH THE DEVELOPERS TO DO ANYTHING WITH THE APPLICATION. YOU JUST SAID ADMINISTRATOR, INSTALL THIS DAMON INTO YOUR CLUSTER. AND WE’RE — KUBERNETES GOT SORT OF COMBINED WITH CLOUD TRANSFORMATION FOR THESE COMPANIES. AND IT’S MORE THAN THAT, IT’S HOW DO WE CONTINUE TO DO DELIVERY, HOW DO WE SHIFT LEST IN TERMS OF AREA DETECTION? I THINK IN A WIDE VARIETY OF WAYS, THE ECOSYSTEM HELPS.>>THERE IS A LITTLE BIT OF A PUSH-PULL BETWEEN THE PROJECT AND THE ECOSYSTEM. IT’S WORTHWHILE TO HAVE STUFF BUILT INTO THE PRACTICAL. AND OTHER TIME, THERE’S AN EXPLOSION. I THINK SECURITY IS A GREAT EXAMPLE OF THIS. I WOULD BE — WE’RE INVESTING HEAVILY IN STANDARD WAYS OF INSTALLING KUBERNETES. THERE’S A GAZILLION WAYS TO DO IT BUT WE ESSENTIALLY WANT TO HAVE A BUNCH OF STANDARDS, A TOOLKIT THERE. WE WANT TO MAKE SURE THAT’S MORE AND MORE SECURE AS WE GO. WHEN WE LOOK AT IT THROUGH THE VIEW OF THE ECOSYSTEM, WE WANT TO MAKE SURE THAT THERE’S A CONSISTENT BASE THAT EVERYBODY CAN BUILD ON TOP OF. I THINK THERE’S A LOT OF ROOM FOR FOLKS TO SORT OF BUILD EXPERIENCES ON TOP OF THAT. VENDORS DOING IT, OR COMPANIES BUILDING THEIR OWN INTERNAL PLATFORM.>>I’LL SAY TOO FROM THE BEGINNING, WE’VE TRIED TO NOT BE EVERYTHING TO EVERYONE. WE’VE BEEN VERY CLEAR ABOUT WHAT. WEED KUBERNETES TO DO AND NOT DO. AND WE MOVED A LITTLE BIT OVER THE YEARS AS WE SEE THE CLUSTER TURNUP IS A REALLY COMMON PROBLEM. SO WE ADOPTED TOOLS LIKE CUBE ATOM TO MAKE THINGS EASIER AND PROBABLY WILL CONTINUE TO EXTEND IN SMALLER WAYS. BUT WE KNOW THAT THERE’S ROOM ON PURPOSE FOR PEOPLE TO BUILD UP AND AROUND AND BELOW THE SYSTEM ITSELF.>>YEAH, I THINK IT WAS AROUND THE END OF 2017 THAT THE LEADS GOT TOGETHER IN THE COMMUNITY AND DECIDED THAT WE NEED TO DEFINE A STABLE CORE. AND THAT CORE WOULD BE KEPT WHOLE AND STABLE. AND THAT’S WHAT CONFORMANCE IS DEFINED AROUND BUT THEN BEYOND THE CORE. THERE’S THE AXIS OF SECONDARY LAYERS, THE SERVICES LAYER, THE DEVELOPER EXPERIENCE LAYER, CICD. THOSE ARE AREAS WHERE MULTIPLE COMPANIES CAN BUILD EXPERIENCES AND BUILD PRODUCTS. AND THE OTHER ACCESS IS REALLY SPECIFIC FOR PARTICULAR VERTICALS, SOLUTIONS THAT ARE MANY TOWARD FINANCIAL SERVES OR RETAIL OR CERTAIN OTHER VERTICALS.>>A LOT OF WHAT YOU’RE TALKING ABOUT HERE IS THE BASE PRODUCTED, AND THEN HOW YOU CAN BUILD ON TOP OF IT. WHAT I’M TRYING TO GET AT IS MORE, HIKE, SOME COMPANIES DON’T HAVE THIS EXTENSIVE ENGINEERING TEAM, RIGHT? THEY DON’T HAVE THESE RESOURCES INTERNALLY THAT THEY CAN KIND OF PROP ON. AND SOME VENDORS FILL IN THAT SPACE AND SAY WE’RE GONNA KINDA TAKE AWAY THAT COMPLEXITY OF THE BASE PRODUCT. SO HOW DOES THE ECOSYSTEM COME IN IN THAT POINT AND HELP THESE COMPANIES THAT MAY BE A LITTLE LESS TECHNICAL? THEY MIGHT NOT EVEN BE TECHNOLOGY COMPANIES.>>I THINK THAT’S WHERE VENDORS COME IN. AND AS YOU LOOK AT WHERE FOLKS ARE BUILDING BUSINESSES AROUND THIS, THEY BRING OPINION. THEY BRING THIS CURATED VIEW OF, HEY, IF YOU USE THIS SET OF PROJECTS WITH A LITTLE BIT OF PROPRIETARY STUFF MIXED IN, YOU’RE GONNA HAVE A GOOD TIME. AND BRINGING THAT OPINION, THAT ROADMAP FOR HOW THESE THINGS GO TOGETHER IS ONE OF THE PLACES WHERE A LOT OF VENDORS DO ADD VALUE.>>RIGHT. AND I THINK THE MANAGED SERVE, LIKE THE SERVICE WE RUN IN AZURE AND ANY OF THE CLOUDS, IT’S ALSO DOING THAT. WE DON’T JUST TAKE RELATED SPACE AND FLIP THEM UP. WE TEST IT, WE MAKE SURE THE UPGRADE WORKS. AND THEN CLOUD BOUNDARY, FOR SOME PEOPLE IT JUST MAKES MORE SENSE TO COME IN AND DROP THE HAS LAYER. THERE’S LIKE 19 DIFFERENT FUNCTIONS ON TOP OF KUBERNETES. SOMETIMES IT JUST MAKES SENSE TO GO WITH SOMEONE AND USE THEM TO PROVIDE AN EASIER DEVELOPER EXPERIENCE.>>RIGHT. IF YOU THINK BACK TO WHERE LINUX WAS, CIRCA 2002, LINUX WAS EIGHT YEARS OLD AT THAT POINT. THERE WERE 500 LINUX DISTRIBUTIONS THAT YOU COULD GET. SOME OF THEM YOU HAD TO DOWNLOAD THE BITS AND COMPILE YOURSELF. SOME OF THEM WERE PREBUILT. SOME OF THEM HAD UI’S, MOST WERE WRITTEN IN TK. AND OVER TIME THOSE THINGS HAVE GOTTEN EASIER. AND SOME OF THE LOWER PLAYERS HAVE FALLEN OFF THE MAP OR BEEN CONSOLIDATED. AND I THINK WE’RE SORT OF AT THAT STAGE NOW WITH KUBERNETES WHERE IT’S STILL A LITTLE HARDER THAN IT NEEDS TO BE. I THINK THERE’S OPPORTUNITIES FOR THE CORE PROJECT TO GET SIMPER. AND THAT’S I THINK THE REAL POWER OF THE COMMUNITY AND THE ECOSYSTEM.>>OKAY.>>I WAS TALKING TO A VC A LITTLE WHILE AGO. AND THEY’RE LIKE OKAY, HOW DO I PICK WHICH KUBERNETES COMPANIES TO INVEST IN?>>YEAH.>>AND MY ANSWER WAS I DON’T KNOW — WE ALREADY SOLD SO THAT’S NOBODY LEFT. NO. NO, MY ANSWER WAS THAT IF YOU WANT TO LOOK FOR THE INVESTMENT OPPORTUNITY, LOOK FOR THE THINGS THAT KUBERNETES ENABLES. WHAT ARE THE THINGS THAT YOU CAN DO THAT YOU WEREN’T ABLE TO DO BEFORE BECAUSE WE HAVE THIS UPLEVELLING OF TECHNOLOGY IN THIS PLATFORM? ONE OF THE THEMES IS WE WANT TO MAKE KUBERNETES BORING. THAT MEANS THE EXCITEMENT MOVES UP THE STACKS.>>I THINK THE SUCCESS WOULD BE IT COMES LIKE LINUX BUT IT POWERS MANY OTHER PRODUCTS AND MANY OTHER SYSTEMS.>>SO IN TERMS OF — IF IT’S STILL COMPLEX, WHERE DO YOU SEE ROOM FOR REDUCING THAT COMPLEXITY AND MAKING IT EVEN EASIER FOR AGAIN, THESE COMPANIES THAT ARE NOT GOOGLE AND THEY MIGHT NOT EVEN BE A TECHNOLOGY COMPANY.>>I THINK REALLY IT’S MANAGED SERVES, FOR SURE. I’VE TALKED TO EVEN THE BIG COMPANY, AND THEY’RE RUNNING TEN, 15 CLUSTERS. AND MY TEAMS ARE RUNNING TENS OF THOUSANDS. SO WE’RE JUST GONNA HAVE MORE AUTOMATION, WE’RE GONNA HAVE MOREMECHANISM BEHIND IT.>>RIGHT.>>I THINK THAT’S A BIG PLACE. BUT ALSO I THINK THESE VENDORS AND THE STACKS THEY BRING ON TOP. THAT’S IMPORTANT TOO.>>HONESTLY, I THINK THE MANAGEMENT OF KUBERNETES, IF YOU THINK ABOUT WHO ARE THE USERS, ESPECIALLY MOVING INTO THE LARGE ENTERPRISE, THOSE TEAMS HAVE OTHER FISH TO FRY. THEY HAVE OTHER BUSINESS GOALS. THEY HAVE DEVELOPERS THAT WANT TO WRITE CUTTING-EDGE APPLICATIONS THAT WILL MOVE THE BUSINESS FORWARD. AS FAR AS MANAGING OF KUBERNETES CLUSTERS, I THINK THAT IS SOMETHING THAT IDEALLY IS AUTOMATED THROUGH A CLOUD SERVICE OR SOME OTHER PARTNER THAT YOU’RE WORKING WITH. OUR APPROACH HAS BEEN TO BUILD MORE OF AN END-TO OF END PRODUCT ON TOP OF IT. WHAT WE CALL ANTHROS.>>IF YOU GUYS WERE LOOKING AT THE START OF IT. YOU TALKED TO INVESTORS, YOU WERE SAYING. WHAT WOULD YOU LIKE TO SEE START-UPS BUILDING AT THIS POINT? TO PUSH THAT FORWARD? TO PUSH THESE KINDS OF ISSUES THAT STILL EXIST? AND CLEARLY THERE’S NO SUCH THING AS A PERFECT PROJECT.>>>KUBERNETES IS GREAT FOR OPERATOR BUS IT DOESN’T DO MUCH FOR DEVELOPERS. IT DOES ALMOST NOTHING FOR DEVELOPERS. AND SO WE HAVE TO FIX THAT, RIGHT? AND THAT’S THE LARGER ECOSYSTEM.>>THE LARGER ECOSYSTEM.>>WE AS THE COMPUTING INDUSTRY HAVE TO MIX THAT. HAVE TO FIX THAT. BECAUSE IT’S JUST TOO HARD. WE DON’T DO ANYTHING TO HELP YOU BUILD A LARGER-SCALE SYSTEM. IT’S JUST TOO HARD. AND PEOPLE DON’T KNOW HOW TO DO IT. AND THEY BUILD BAD SYSTEMS.>>TOOLS, VISIBILITY, DEBUGGING, INTROSPECTION, THE THINGS THAT SOFTWARE DEVELOPERS TODAY IN, DAY OUT. IF YOU SPEND 10% OF YOUR TIME WRITING CODE, YOU SPEND THE OTHER 90% DEBUGGING IT. AND KUBERNETES IS NOT A THEME FOR THAT YET.>>YEAH.>>SO I THINK THERE’S LOTS OF TUNE THERE. AND I’M EAGER TO SEE WHAT MORE PEOPLE ARE DOING THERE.>>I WOULD SAY ONE OF THE THINGS THAT MADE KUBERNETES SUCCESSFUL IS THAT IT IS A TOOLKIT. THINGS YOU CAN PUT TOGETHER. IT’S LIKE ESSENTIALLY A LEGO SET. SIMILAR TO THE WAY THAT CLOUD IS A LEGO SET. AND I THINK WE FIND WE NEED MORE TYPES OF LEGOS THAT HELP US BUILD UP. WE HAVE SEEN FOLKS, DEVELOPERS WHO PROVIDE THAT OVERALL EXPERIENCE, THE BIG PLASTIC TOY. WE HAVEN’T SEEN ANYONE COMPLETE THE PICTURE OF OKAY, LET’S DO LEGOS ALL THE WAY UP.>>RIGHT.>>WE’RE FIGURING OUT WHAT THE RIGHT SHAPES OF THOSE PIECES ARE TO CREATE THAT SORT OF ALL-IN EXPERIENCE. BUT IT’S HARD WORK. AND THERE’S A LOT OF EXPLORATION. BUT I THINK THIS IS ONE PLACE WHERE WE TALKED ABOUT IT EARLY ON WITH KUBERNETES, WITH THE HISTORY OF GOOGLE, WE HAD THAT PICTURE ON THE FRONT OF THE BOX. WE HAD THAT MAP. AND I THINK IN A LOT OF WAYS, WE’RE OFF THE MAP NOW.>>OH, YEAH.>>AND SO WE’RE — AS A COMMUNITY, WE’RE HAVING TO ACTUALLY FIGURE THIS STUFF OUT IN SOME WAYS FOR THE FIRST TIME.>>YES.>>WHEREAS EARLY ON WITH KUBERNETES, WE KINDA ALREADY HAD A GAME PLAN IN MIND.>>FOR SURE. I THINK IT’S AKIN TO THE DEVELOPMENT OF OBJECT NARRATIVE PROGRAMMING LANGUAGES, OR PROGRAMMING LANGUAGES IN THE FIRST PLACE. WE KINDA UNDERSTAND THE PROBLEM. AND WE HAVE SOME SENSE WHEREOF WE NEED TO GO. BUT WE’RE REALLY OUT IN THE JUNGLE.>>YEAH.>>I THINK THERE ARE TWO AREAS OF INNOVATION THAT STAND OUT, ESPECIALLY AS KUBERNETES BECOME MORSE POPULAR IN THE ENTERPRISE. THERE’S CERTAINLY THE DEVELOPER EXPERIENCE. BUT THERE’S ALSO THE SCALEABILITY OF IT. SO WE’VE BEEN WORKING A LOT MORE ON MULTIPLE CLUSTERS. WE FOUND THAT EVERY CUSTOMER HAS MANY, MANY CLUSTERS. AND THAT’S AN ACTIVE AREA OF INNOVATION.>>THAT’S FOR SURE. AND THAT’S ONE OF THE REASONS WE DID INTERNATIONALIZED POLICY MANAGEMENT. SO YOU CAN MANAGE A POLICY FOR ALL OF YOUR CLUSTERS FROM A CENTRAL PLACE, HAVE ONE POLICY THAT GETS BLOWN OUT TO EVERY SINGLE CLUSTEDER YOU HAVE. MY OBSERVATION IS THE SAME THING. AND I THINK THAT’S ONE THAT SURPRISED ALL OF US.>>YEAH.>>WE WERE USED TO THESE GIANT CLUSTERS. BIG IRON GIANT CLUSTERS. AND THE AVERAGE CLUSTER SIZE IS NOT GIANT.>>I THINK IT’S AN EVOLUTION OF THE CLOUDSPACE ALSO. AT ONE POINT, SEVERAL YEARS AGO, EVERYBODY THOUGHT WE WERE GONNA END UP WITH THREE BIG WORLDWIDE COMPUTERS, RIGHT? AND WE’RE FINDING THAT REALITY, ESPECIALLY WHEN YOU TRAUMATIC TO REAL ENTERPRISES, IS MORE COMPLEX THAN THAT. THERE WERE THESE FORCES PULLING TOGETHER THE CLOUD. NOW THERE ARE FORCES SENDING IT IN OPPOSITE DIRECTIONS. DATA SOVEREIGNTY EDGE, RISK AROUND SINGLE VENDORS. SO A BIG PART OF WHAT I THINK FOLKS ARE LOOKING AT KUBERNETES FOR IS A WAY TO ACTUALLY START BRINGING CONSISTENCY ACROSS A VERY, VERY COMPLEX INFRASTRUCTURE ECOSYSTEM OR INFRASTRUCTURE LANDSCAPE.>>RIGHT.>>I THINK THE CONSISTENCY MESSAGE IS REALLY A CRITICAL MESSAGE. THAT PEOPLE COME TO US ALL THE TIME, WHETHER AT GOOGLE OR KUBERNETES AND SAY I’VE GOT THESE DISPARATE WORLDS AND I NEED TO FIND A WAY TO BRIDGE THEM. I DON’T WANT TO TEACH MY PEOPLE HOW TO DO EVERYTHING TWICE.>>YEAH.>>FOR SURE.>>ONE OF THE THINGS THAT SURPRISED ME AT CAPE CON IS THE NUMBER OF ANCILLARY PRODUCTS THAT HAVE BEEN DEVELOPED AROUND THE MAIN KUBERNETES PROJECT. AND IT SEEMS TO ME, AS SOMEBODY OBSERVING, THAT THE MORE YOU GET INTO THIS, THE MORE YOU NEED THESE ANCILLARY TOOLS. AND YOU DIDN’T REALIZE THAT. OR MAYBE YOU DID. I’M JUST WONDERING, WHEN YOU WERE THINKING ABOUT THIS AS YOU DEVELOPED IT, DID YOU SORT OF FORESEE THAT THERE WOULD BE ALL THESE ANCILLARY CLOUD TECHNOLOGIES THAT WOULD HAVE TO DEVELOP?>>I THINK THAT WAS HONESTLY THE EXPERIENCE INSIDE OF GOOGLE. I THINK WHEN WE TALK ABOUT BOARD, WHICH WAS THE GOOGLE SYSTEM THAT INSPIRED KUBERNETES, YOU ASK DIFFERENT TEAMS INSIDE BORG AND THEY’RE GONNA GIVE YOU DIFFERENT ANSWERS. YOU ASK THE AVERAGE GOOGLE DEVELOPER, THEY’RE GONNA THROW IN EVERYTHING AND THE KITCHEN SINK AND CALL IT BORG. HOOKING AT THE EVOLUTION OF THE ANCILLARY TOOLS THAT GOT MADE TO MAKE THE GOOGLE INFRASTRUCTURE SYSTEM SUCCESSFUL, IT WAS PRETTY CLEAR THAT WE WERE GONNA SEE THAT HAPPEN AND MORE SO IN THE OPEN SOURCE ECOSYSTEM.>>I ALSO FELT THAT YOU WONDER LOST ON THE ECOSYSTEM. BUT I ALSO THINK YOU LOOK AT LYNN YOU CAN, HOW MANY PACKAGE THERE ARES? AT LINUX, HOW MANY PACKAGES THERE ARE? THAT’S JUST THE WAY COMPUTING AND OPEN SOURCE WORKS. IT’S A BAZAAR, A LOT OF LITTLE PEOPLE DOING A LOT OF DIFFERENT THINGS.>>WE WANTED THE ECOSYSTEM TO HAVE A THOUSAND FLOWERS BLOOM, BUT IT WAS ACTUALLY LIKE 25 BILLION. NOW WE’RE SORTING THROUGH WHICH ARE THE GOOD ONES AND WHICH ARE NOT THE GOOD ONES.>>AND SOME WAYS, WHO ARE WE TO SAY?>>IT’S ORGANIC, IT’S HAPPENING. THERE’S A SORT OF CAMBRIAN EXPLOSION OF IDEAS. LIKE WE DIDN’T KNOW WHAT WE COULD DO UNTIL WE GOT TO THIS STEP.>>THAT’S WHAT IT SEEMS , THIS LEAP FORWARD CREATES THIS NEED FOR SOME OTHER TOOLING THAT JUST WASN’T THERE.>>EXACTLY. AND THAT OPENS A NEW DOOR. AND YOU STEP INTO THAT ROOM, AND THE NEW DOOR IS THERE.>>BUT IT ALSO SOLVES A BUNCH OF PROBLEMS THAT NO LONGER ARE IN NEED OF SOLVING. NOBODY THINKS ABOUT HOW TO DISTRIBUTE THEIR BINARIES AROUND THE WORLD ANYMORE. IT’S A CONTAINER IMAGE AND A CONTAINER REGISTRY.>>RIGHT.>>SO DO YOU HAVE THAT EXPLOSION OF NEW STUFF BUT YOU ALSO HAVE THESE PROBLEMS THIS ARE NOW DONE. AND THAT’S GOOD.>>I ACTUALLY THINK THERE’S ANOTHER LAYER OF ECOSYSTEM THAT HAS YET TO HAPPEN IN KUBERNETES. WHICH IS USING THE KUBERNETES PATTERN OR THE STYLE. THE DECLARE TIV API AND THE CONTROLLER. IT’S NOT REALLY A T-SHIRT STYLE. IT’S A STYLE ASSOCIATED WITH KUBERNETES THAT OTHER PROJECTS CAN ADOPT.>>IT TURN OUT WE DID SOMETHING WE DIDN’T REALLY PLAN TO DO, WHICH IS DEFINE A WHOLE NEW FRAMEWORK FOR BUILDING API’S.>>I HAVE KIND OF A COMPLEX QUESTION. WE HAVE ONE MINUTE LEFT. HOW DO YOU SEE SERVOS AND KUBERNETES WORKING TOGETHER?>>THAT’S TOTALLY COVERABLE IN A MACHINE.>>THESE ARE NOT EITHER/OR, THESE ARE AND. TALKING ABOUT THESE LEGO BRICKS AND BEING ABLE TO BUILD UP, I THINK SERVER LISTS — AND SERVER LIST IS NOT ONE THING. IT’S THREE, FOUR, EVEN MORE. BUT THESE ARE SOME OF THE BUILDING BRICKS. ONE OF THE THINGS THAT I THINK, WHEN PEOPLE LOOK AT KUBERNETES, THEY WANT TO BE ABLE TO DO THESE THINGS LIKE SERVER LISTS. BUT NOW I HAVE TO DO SOMETHING WHERE I’M DOING SOME LONG-RUNNING MATH THAT DOESN’T FIT IN THE SERVER LIST. I DON’T HAVE TO GO BACK TO RAW VM’S TO DO THIS, I CAN DROP DOWN TO SOMETHING THAT’S MUCH MORE APPROACHABLE.>>OKAY.>>WHEN WE STARTED BUILDING SERVELESS CONTAINER INFRASTRUCTURE INTO OUR CLOUD, WHAT WAS INTERESTING TO FIGURE OUT IS THAT KUBERNETES IN ITS CODE, IN ITS CORE, IS DEEPLY ADDICTED TO MACHINES. THERE’S ALL KINDS OF IMPLICIT ASSUMPTIONS BAKED INTO THE CODE THAT ASSUMES THAT MACHINES ARE THERE. I DON’T THINK MOST PEOPLE WANT TO SEE VIRTUAL MACHINES IN THE FUTURE AS A CONCEPT.>>I WOULD LOVE TO HEAR YOU GUYS. BUT WE ARE OUT OF TIME. THANK YOU SO MUCH FOR A GREAT DISCUSSION. I REALLY APPRECIATE IT.>>THANK YOU.>>THANK YOU.>>THANK YOU FOR HAVING US.>>SEE YOU GUYS.>>>LADIES AND GENTLEMEN, UP NEXT WE HAVE A SPONSORED INNOVATION BREAK. ALYSSA BERGMAN FROM ADOBE SYSTEMS, JAY DOBBS FROM SAPPHIRE VENTEDURES, AND SANJAY KUMAR OF GEOSPATIAL MEDIA. AND YOUR MODERATOR IS NICOLE HELMY, R FROM SAP.>>HI, GOOD AFTERNOON, EVERYONE. THIS SESSION IS TALKING ABOUT THE EVOLVING DATA LANDSCAPE, GIVEN THE CHANGE OF DATA WITH SOCIETAL SCRUTINY, REGULATORY PRESSURES, AND THE ENHANCED DESIRE FROM THE ENTERPRISE TO PERSONALIZE AND LEVERAGE THE DATA THEY HAVE. ALISA BERGMAN FROM ADON’T BEY, FROM THE LEGAL SECTOR AS WELL AS THE ENTERTAINMENT SYSTEM. JAI BRINGS EXPERIENCE FROM A LONG LINE OF SUCCESSFUL INVESTMENTS, LIKE SQUARE. HE SITS ON THE BOARD OF DATA ROBOT AND A DOZEN OTHER VENTURES. AND SANJAY WHO REPRESENTS GEOSPATIAL MEDIA, WHICH IS A COMMUNICATIONS COMPANY BASED OUT OF INDIA. BUT HE ALSO ADVISES A NUMBER OF PUBLIC POLICY ORGANIZATIONS GLOBALLY, INCLUDING THE U.S. NATIONAL GEOSPATIAL ADVISORY COMMITTEE. HE JUST RETURNED FROM A TRIP TO DC WITH THEIR LAST MEETING. PLEASE WELCOME OUR PANELISTS.>>THANK YOU.>>SO IT’S BEEN ABOUT A DECADE NOW OF US TALKING ABOUT DATA AS THE NEW OIL. EVERY COMPANY HAS BEEN RUSHING TO MONETIZE THEIR DATA ASSETS, TO UNDERSTAND THEM, AND TO LEARN THE DIFFERENT WAYS THEY CAN USE THEM. BUT WITH ISSUES COMING UP IN THE PAPERS, LIKE SCANDALS AND THE MISS USE OF PERSONAL DATA, OR THE ADVANCING OF A NUMBER OF REGULATORY PROCEDURES AROUND THE WORLD, INCLUDING GDPR, BUT DOZENS OF OTHERS IN DOZENS OF OTHER COUNTRIES, WE’RE SEEING A SHIFT. THE TOPIC OF CONVERSATION TODAY IS TO DISCUSS HOW THAT SHIFT IS GOING TO PLAY OUT IN ENTREPRENEUR AND START-UPS OVER THE NEXT TEN YEARS. I’D LIKE TO OPEN IT UP BY ASKING THE PANELISTS, WHAT DOES IT MEAN FOR DATA TO BE OKAY FOR A BUSINESS TO USE? AND WHAT DISTINGUISHES DATA THAT IS AND NOT ACCEPTABLE?>>OKAY, GREAT. IT’S INTERESTING THAT YOU USE THE PHRASE “DATA IS THE NEW OIL.” WE AT ADOBE SAY TRUST IS THE NEW CURRENCY. AND WE THINK IT’S IMPORTANT TO PUT THE USER AT THE CENTER OF THE EQUATION. WE HAVE HAD A LONG TIME OF SAYING WHAT YOU DO, DON’T DO WHAT YOU SAY, DON’T SURPRISE THE USER. AND THESE NOTHINGS OF PRIVACY ARE VERY PERSONAL, VERY DIFFERENT CULTURALLY, GENERATIONALLY. SO IT’S REALLY IMPORTANT TO PUT THE USER AT THE CENTER OF THE EQUATION. I THINK THAT’S RIGHT FOR CERTAIN BUSINESS MODELS AND USERS ULTIMATELY DEPENDS ON CONTEXT AND BEING TRANSPARENT, AND REALLY THINKING ABOUT TRUST AS THAT CURRENCY.>>YEAH, WELL, WE LIVE IN A DATA ECONOMY. AND SOMEHOW DATA POLITICS AS WELL TODAY. SO IT’S A VERY IMPORTANT TOPIC BECAUSE IT HAS A LOT OF ECONOMIC AND POLITICAL VALUE. I THINK THAT PRIMARILY WE HAVE THREE TYPES OF DATA, WHICH WE CAN CHARACTERIZE, DATA A WHICH IS BEING COLLECTED BY THE GOVERNMENT OR DELIVERING GOVERNMENTS, CITIES AND SERVICES. AND CATEGORY 2 OF THE DATA, WHICH HAS BEEN COLLECTED BY NATIONAL SECURITY AGENCIES, AND THIS INCLUDES A LOT OF BEHAVIORAL AND OTHER INFORMATION AS WELL. AND THE THIRD CATEGORY OF INFORMATION IS THAT WE ARE COLLECTING FOR THE BUSINESSES AND HUMAN SERVES. AND I THINK THAT THOSE BASED AROUND DATA WHICH IS A NATIONAL ISSUE. BUT DATA IS AVAILABLE IN THE PUBLIC DOMAIN, AND A LOT OF INNOVATORS CAN MAKE USE OF THAT INFORMATION. THE PROBLEM COMES WHEN YOU’RE TALKING ABOUT THE PERSONALIA, TRIBS OF THE INFORMATION. AND THE, PERSONAL ATRIBUTES OF THE INFORMATION, AND THE CONSENT TO BE USED. IT’S FINE. BUT THE MOMENT THEY EXTEND THAT, BY DISTRIBUTING IT TO OTHER COMPANIES, THAT’S WHERE IT S THE REAL PROBLEM. AND I THINK THE ISSUE SHOULD BE DIRECTED TO THE DIFFERENT POLICY AND ETHICS BOARD.>>FOR US IT’S ALWAYS YOU’RE LOOKING FOR OPPORTUNITIES TO INVEST, RIGHT? AND THERE ARE ENTREPRENEURS IN THE AUDIENCE HERE. SO AS SOON AS — THERE’S THIS WHOLE DEBATE ABOUT WHAT DO YOU OWN, WHAT DO YOU DON’T OWN, HOW DO YOU TRUST AND PROVIDE THAT TRUST TO YOUR CONSUMERS AND CUSTOMERS? THERE’S A BUSINESS OPPORTUNITY HERE. SO WE KIND OF LOOK AT IT AS, YES, THERE ARE SOME BUSINESS MODELS THAT HAVE BEEN BUILT BASED ON KIND OF PEOPLE SHARING THEIR DATA FREELY. AND NOT REALIZING WHAT THEY ARE DOING. BUT NOW ENVIRONMENT KIND OF CHANGING. WE ARE ACTUALLY LOOKING AT, AS INVESTORS, AS POTENTIAL OPPORTUNITIES ON HOW YOU KIND OF SOLVE THESE PROBLEMS. WITH THIS INNER EVOLUTION. AND NOW WHAT PEOPLE THINK IS OKAY TO SHARE AND USE WITHOUT NOTIFYING THE ACTUAL OWNER OF DATA.>>RIGHT.>>EACH OF THE THREE OF YOU MENTIONED A KIND OF COMMON THEME, IF I CAN POINT IT OUT. YOU MENTIONED THAT TRUST IS THE NEW CURRENCY. EE SEW IT’S ABOUT MAKING USERS AWARE OF HOW YOU’RE GONNA USE THE DATA. YOU SAID SOMETHING SIMILAR ABOUT CONSENT, AND MAKING SURE PEOPLE HAVE GIVEN CONSENT. AND YOU MENTIONED THAT IT’S IMPORTANT THAT PEOPLE TRUST THE SYSTEM.>>ABSOLUTELY.>>AND BUSINESS OPPORTUNITIES BUILT ON TRUST.>>YEAH.>>GOVERNMENTS AROUND THE WORLD ARE EAGER TO MAKE SURE THAT THAT IS PROTECTED. RIGHT? IT’S ONE THING TO SAY THAT IT’S A BUSINESS’ RESPONSIBILITY TO DO THINGS, IT’S ANOTHER THING TO PUT IN PLACE REGULATIONS. ALL OF THOSE REGULATIONS BIKE GDPR HAVE THAT, REGULATIONS LIKE GDPR HAVE THAT KIND OF COMPONENT. BUT DO YOU THINK REGULATIONS LIKE GDPR, OR LIKE ITS INDIAN EQUIVALENT OR BRAZILIAN EQUIVALENT OR ANY OF THE DOZENS OTHERS BEING CONSIDERED ACTUALLY PROTECTS CONSUMERS? AND WHAT IS IT THAT PEOPLE NEED TO UNDERSTAND ABOUT THOSE REGULATIONS?>>YEAH, IT’S A GREAT QUESTION. IT’S A SUPER COMPLICATED ISSUE. BUT I THINK UNDERLYING A LAW LIKE GDPR, OR FRANKLY ALL OF THE LAWS THAT ARE BEING CONSIDERED AROUND THE GLOBE AND HERE IN CALIFORNIA IS THE LONG-STANDING WHAT WE CALL FAIR INFORMATION PRACTICES. AND THESE ARE VERY UNDERLIE ALL THE PRIVACY LAWS IN THE UNITED STATES AND GLOBALLY. AND IT’S REALLY COMMON SENSE. SAYING TRANSPARENT, GIVING CHOIS. THESE HAVE LONG RICH INSIDE HISTORIES WHEN IT COMES TO PRIVACY. I THINK WE’RE SEEING THAT GLOBALLY. I THINK IT IS GOOD FOR CONSUMERS BECAUSE IT’S GETTING ALL KINDS OF ATTENTION BY COUNTRIES LIKE THIS. SENIOR MANAGEMENT. REALLY EXCITINGLY WE’RE SEEING OTHER VENDORS WHO HAVE HIGH MARKS IN PRIVACY. CONSUMERS. TO DEAL WITH COMPANIES WHO THEY LIKE THEIR PRIVACY PROMISES ON. THERE’S A LOT OF BIG TECH COMPANIES MAKING BIG BETS ON PRIVACY. SO IT’S REALLY BECOMING A COCKTAIL PARTY ISSUE. A BOARD LEVEL ISSUE. AND REALLY SOMETHING THAT EVERYBODY CARES ABOUT. I THINK THOSE LAWS AND THE CONTINUED FOCUS ON IT IS ALL GOOD FOR THE CONSUMER.>>DO YOU THINK THERE ARE ANY ASPECTS IT WAS THAT AREN’T GOOD FOR CONSUMERS?>>OF THE LAWS?>>YES. OF REGULATIONS SUCH AS GDBR?>>YES, THERE ARE SOME UNINTENDED CONSEQUENCES OF VARIOUS LAWS. AND THE DEVIL’S IN THE DETAILS, IF YOU WILL, OF IMPLEMENTATION. AND PRIVACY, IT’S IMPORTANT TO STRIKE THE RIGHT BALANCE BETWEEN PROTECTING CONSUMERS AND RESPONSIBLE USE OF INFORMATION. AND REALLY RESPONSIBLY UNLOCKING THAT POWER OF DATA FOR REAL INNOVATION.>>IT’S ON THE ATTENTION OF EVERY NATIONAL GOVERNMENT. AND GDPR IS NOT NECESSARILY THE BEST TO START WITH. BUT IT IS THE MOST COMPREHENSIVE WHICH HAS COME UP. AND IT IS JUST THE BEGINNING. AND I THINK OTHER NATIONS ARE LEARNING A VERY CRITICAL BOARD OF GDPR. ON SOME EXTENT, IT HAS BROADLY DEFINED TRUST ACROSS THE CONSUMERS’ MIND. THERE IS THE GOVERNMENT WHICH IS TRYING TO PROTEC INTERESTS. AT THE SAME TIME, WE HAVE SOME OF THESE PROVISIONS ARE OVEREMPHASIZING THIRD PARTY LIABILITY AND THINGS LIKE THAT. I THINK WE’LL GET THERE. AND OTHER NATIONS ARE TRYING TO FOLLOW SOME OF THOSE. SO YES, IT SEEMS — I THINK THE PUBLIC POLICY AND REGULATIONS WILL BE IN PLACE. AND I THINK WITH TIME, IT WILL EVOLVE.>>THERE’S ALSO THE CHALLENGE IS THAT IT IS GOING TO CAUSE SOME OF THE BUSINESS MODELS THAT WE HAVE KIND OF GOTTEN USED TO.>>YES>>NOT BEING ABLE TO BE THERE ANYMORE, RIGHT? A LOT OF PEOPLE LIKE TO READ EVERYTHING FOR FREE. BUT THEN THAT MEANS THAT PEOPLE CAN’T ADVERTISE TO YOU. HOW DO THOSE MEDIA OUTLETS WHO SURVIVE ON ADVERTISING SURVIVE? RIGHT? SO THERE ARE CERTAIN THINGS THAT I THINK PEOPLE HAVEN’T THOUGHT THROUGH THE BUSINESS MODELS. AND ALSO HOW SOME OF THESE REGULATIONS ARE ACTUALLY IMPLEMENTED IS NOT VERY CLEAR. IF YOU READ SOME OF THOSE IN REGULATIONS, IT IS VERY UNCLEAR WHAT IS IT THAT YOU’RE SUPPOSED TO DO? AND I’M SURE THAT ALL OF THESE THINGS ARE GOING TO GET SETTLED HERE PROBABLY IN THE U.S. IN COURT. AND THEN IN EUROPE PROBABLY SOMETHING LIKE THAT IS JUST GOING TO BE DICTATED. BUT BY THE TIME EVERYBODY FIGURES OUT WHAT IS THE RIGHT WAY TO IMPLEMENT THE GDPR, WHATEVER CALIFORNIA IS TRYING TO IMPLEMENT, TECHNOLOGY WILL HAVE MOVED ON.>>YES.>>THERE WILL BE SOMETHING ELSE THAT WILL BE GOING ON. AND JUST LIKE WE FEEL THAT THE REGULATOR, ENVIRONMENTAL LAWS DO NOT KINDA PROTECT YOU, BUT THESE NEW LAWS GET IMPLEMENTED? THEN THE TECHNOLOGY WE WILL HAVE BY THEN I DON’T THINK — THESE LAWS WILL BE APPLICABLE TO THEM SO MUCH IT’S ALWAYS LIKE A CATCH-UP THAT YOU HAVE TO DO. AND I THINK EVENTUALLY, YOU KIND OF HAVE TO HAVE COMPANIES OR HAVE THE ETHICS TO SAY THAT, LOOK, WE’RE GOING TO DO THE RIGHT THING WITH OUR CUSTOMERS’ DATA. THAT HAS TO BE DONE AND CREATED THE ETHICS WITHIN ENTERPRISES.>>I’D LIKE TO PULL ON THAT THREAD A LITTLE BIT. IT’S THE COMPANY’S RESPONSIBILITY TO USE THAT DATA ETHICALLY. AS AN INVESTOR, YOU’RE EVALUATING DIFFERENT BUSINESSES. WHAT IS IT THAT YOU LOOK FOR IN THE WAY THEY TALK ABOUT DATA THAT HELPS YOU TO DISTINGUISH THAT THIS COMPANY GETS IT AND THIS COMPANY DOESN’T IT? OR WHERE THE RED FLAGS THAT YOU MIGHT LOOK FOR?>>SO LOOK, I THINK WHEN WE INVEST IN COMPA WE TRY TO INVEST IN MANAGEMENT TEAMS THAT WE THINK ARE GOING TO BE ETHICAL AND DO THINGS THAT ARE HONEST. SO IT IS VERY HARD TO EVALUATE WHEN WE LOOK AT A COMPANY WHAT THEY’RE GOING TO DO WITH THEIR CUSTOMER DATA. OR HOW THEY’RE GOING TO TREAT DIVERSITY OR PEOPLE. WHAT IS THEIR ENVIRONMENT, THEIR WORK ENVIRONMENT LIKE, RIGHT? SO FOR US, THE CULTURE AND THE MANAGEMENT TEAM ARE ALL SAYING, HEY, WE WANT TO DO THE WRONG THINGS. SOMETIMES WE MIGHT TAKE A WRONG STEP, BUT WE’LL FIX IT. SO THAT IS CRITICAL FOR US THAT SAY THAT, HEY, THE MANAGEMENT TEAMS ARE FOCUSED ON BUILDING COMPANIES THAT ARE ETHICAL AND DOES THE RIGHT THING FOR THEIR CUSTOMERS.>>INTERESTING. FROM A GOVERNMENTAL PERSPECTIVE, SANJAY, ARE THERE DIFFERENT WAYS, DIFFERENT NUANCES THAT GOVERNMENTS ARE THINKING ABOUT THE USE OF DATA? ONE OF THE THINGS THAT I THINK HAS BEEN MOST INTELLIGENT IN THE NUANCES IS THE DATA LOCALIZATION ASPECT. SO GDPR HAS A PROVISION IN WHICH DATA CAN SLOW OUTSIDE OF EUROPE. BUT THE REGULATION BEING CONSIDERED IN INDIA, AS I UNDERSTAND IT, MIGHT LIMIT THAT DATA TO STAY IN-COUNTRY. HOW IS THAT GOING TO PLAY OUT IN THE GLOBAL STAGE AS THIS WAR OVER DATA KIND OF EVOLVES?>>WELL, I THINK WE HAVE TO ACCEPT THIS FACT THAT DATA IS — IN A KIND OF SECURITY SITUATION OR ANY KIND OF BUSINESS, DATA IS PLAYING A BIG ROLE. WE ALL EXPERIENCE THAT. HOW THE CYBER WAR IS AROUND. SO THE NATIONAL COMPANIES ARE VERY, VERY CONSCIOUS OF THIS FACT. AND THE DATA SOVEREIGNTY, DATA SAFETY, AND DATA LOCALIZATION. BECAUSE IT’S AN ASSET. DATA IS AN ASSET. SO YOU WANT TO HORSE YOUR ASSET IN YOUR TERRITORIAL CONTROL. THAT’S WHERE THE COMPANIES ARE, THEIR VIEWPOINT THIS IS. BUT AT THE SAME TIME, I WOULD LIKE TO SAY THAT THAT IS A VERY VALID POINT OF VIEW. BUT THE SAME, YOU LOOK AT THE GLOBALIZATION OF BUSINESS. FOR BUSINESSES, THERE HAS TO BE PROVISIONS FOR MAKING USE OF THEIR DATA. AND HOSTING THE DATA. AND WITH SOME KIND OF PROTOCOL WHERE IS THOSE BUSINESSES CAN TAKE CARE OF THOSE REQUIREMENTS OF THE NATIONAL GOVERNMENTS. BUT THAT’S WHERE WE ARE HEADING TO. I THINK MOST OF THE GOVERNMENTS WHICH I TALK TO, THEY ARE VERY CONSCIOUS OF THE FACT THAT THEY WANT TO HAVE CONTROL OR TERRITORIAL CONTROL OF THE DATA HOUSES.>>ADOBE BEING A HUGE, MULTINATIONAL BUSINESS, HOW ARE YOU LOOKING AT THE FLOW OF DATA ACROSS COUNTRIES FOR DOING THE TYPE OF INNOVATIVE WORK THAT YOU’RE TRYING TO ACHIEVE?>>YEAH, IT’S A GREAT QUESTION. AS I TALKED ABOUT BEFORE TOO, THERE’S DIFFERENT CULTURAL ATTITUDES TOWARD PRIVACY, DIFFERENT LEGAL REGIMES YOU NEED TO BE THINKING. AND WE’RE MINDFUL OF ALL OF THE LAWS GLOBALLY AND ALL OF THE DIFFERENT CONSUMERS WHO REPRESENT THAT DATA. AND REALLY SUPPORTIVE OF THE FREEFLOW OF DATA. AND WE HAVE A BASE LINE SET OF PRINCIPLES THAT WE APPLY TO ALL OF OUR DATA. I SPOKE ABOUT THE FAIR INFORMATION PRACTICES. AND WE DO THINK THAT THE PROTECTIONS FLOW WITH THE DATA. SO WE APPLY THAT BASE LEVEL OF PROTECTION, AND WE’RE MIND. OF THE VARIOUS LAYS. VARIOUS LAWS THAT TRAVEL WITH THE DATA.>>DOES IT CHANGE THE WAY THAT YOU HAVE TO STRUCTURE THE COMPANY IF DATA CAN’T FLOW OUT? LET’S IMAGINE A SCENARIO WHERE DATA CAN’T FLOW OUT OF INDIA. THE DATA COLLECTED IN INDIA MUST REMAIN IN INDIA. AND ALL OF THE ANALYSIS AND THE WORK MUST BE DONE IN INDIA. HOW DOES THAT CHANGE THE BUSINESS PRACTICE IF THAT SORT OF THING COMES UP? WOULD THAT BE DISRUPTIVE FOR YOU? IS THAT AN OPPORTUNITY FOR NEW BUSINESSES TO SPRING UP IN THOSE COUNTRIES? HOW DO YOU THINK THAT WOULD PLAY OUT?>>YEAH, I THINK GENERALLY SPEAKING, THAT WOULD BE FAIRLY DISRUPT TESTIFY BUSINESSES BECAUSE THE FREE FLOW OF DATA IS SO VERY IMPORTANT. AND YOU’D HAVE TO HAVE REPLICATIONS OF SERVERS AND DUPLICATIONS OF WORK AND EFFORT. AND YOU’VE GOT DATA LATENCY ISSUES, AND LAW ENFORCEMENT ISSUES. THERE’S A LONG LIST OF LEGAL ISSUES AND TECHNICAL ISSUES YOU’D HAVE TO SORT THROUGH TO ADDRESS SOME OF THOSE REQUIREMENTS. SO WE THINK THE BETTER APPROACH IS TO APPLY FAIR INFORMATION PRACTICES, THINK ABOUT THE FREE FLOW OF DATA, AND REALLY MAKE SURE THE PROTECTIONS FLOW WITH THE DATA.>>DO YOU SEE THAT THERE MAY BE DISRUPTION IN THIS INDUSTRY? HOW ARE YOU INVESTING IN BUSINESSES THAT ARE TACKLING THE CLEAR AND PRESENT QUESTION OF DATA FLOW, DATA PRIVACY AND ALL OF THESE THINGS?>>WELL, THERE IS A BUNCH OF START-UPS THAT ARE DOING FOCUSED ON ENABLING PEOPLE TO PROVIDE GDPR, RIGHT? THAT’S LIKE A REGULATION THAT HAPPENS. THERE ARE SEVERAL COMPANIES THAT ARE TRYING TO ENABLE LARGER ENTREPRENEURS TO THAT THE NOT VIOLATING GDPR. SO THERE IS DEFINITELY OPPORTUNITIES. AND THEN LIKE WE ALSO THINK ABOUT AS YOU BUILD AS ENTREPRENEURS, BUILD THEIR NEW START-UPS, THE WAY THEY’RE GOING TO BUILD IT AND SCALE IT FROM AN INFRASTRUCTURE SIDE OR AN ANALYTIC SIDE IS GOING TO BE VERY DIFFERENT. AS THESE REGULATIONS TAKE HOLD, PEOPLE WILL REALIZE THESE ARE BEST PRACTICES. THIS IS HOW I NEED TO BUILD A GLOBAL COMPANY. AND THERE WILL BE TOOLS AND SOFTWARE THAT PROVIDE THAT KIND OF SUPPORT FOR THESE GLOBAL COMPANIES, RIGHT?>>YEAH, I THINK WE’RE GONNA SEE, AND I DON’T THINK ANYONE WOULD DISAGREE, THAT THERE’S GONNA BE AN EXPLOSION EVEN MORE THAN WE’VE SEEN TODAY.>>OH, YES.>>OF NEW DATA WITH THE INTERNET OF THINGS, WITH AUTONOMOUS VEHICLES, PERHAPS THE ENABLEMENT OF 5G TO SPREAD THAT DATA MORE QUICKLY. DO YOU SEE THAT, SANJAY, I’LL GO TO YOU ON THIS, DO YOU SEE THAT AS AFFECTING WHO OWNS THIS DATA? SO IF I’M AN AUTONOMOUS CAR COMPANY, AND THAT DATA IS FLOWING BACK TO ME ABOUT WHERE THIS CAR IS, HOW FAST IT WAS GOING? OR DO YOU SEE THAT MAKING ITS WAY INTO THE PUBLIC SPHERE OR TRAFFIC MANAGEMENT OR OTHER PUBLIC INFRASTRUCTURE?>>WELL, YOU HAVE TO IMAGINE THAT THE PLETHORA OF DATA WHICH WE’RE GOING TO GENERATE IS ENORMOUS. AND IT’S GOING TO POSE A NEW SET OF CHALLENGES. BECAUSE THE CARS, AUTONOMOUS CARS, WILL BE COLLECTING ALMOST EVERY ACTIVITY WHAT’S HAPPENING INSIDE THE CAR, EVERY OTHER CAR. AND THAT WILL BE PRIVATE AS WELL MANY TIMES. SO THERE’S A DEBATE GOING ON AROUND HOW DO YOU DEAL WITH THAT. BUT THERE’S A LARGER ISSUE, HOW DOES SEVERAL MANUFACTURERS SHARE THE DATA? AND IT’S NOT ONLY YOUR CAR WHICH YOU COLLECT DATA ABOUT YOURSELF. OTHER CARS WILL ALSO COLLECT DATA ABOUT YOU. AND THIS IS GOING TO BE A BIG ISSUE. AND THE PUBLIC POLICY, OFFICIALS ARE REALLY, REALLY BEING CHALLENGED BY HOW TO CREATE PUBLIC SAFETY, LIABILITY, LEGALITY AROUND THIS KIND OF BUSINESS. AND IN MY OPINION, AND IN THIS DEBATE ABOUT DATA, PRIVACY, OWNERSHIP, IS IT’S STILL AT A VERY EARLY STAGE, I WOULD LIKE TO SAY. IT’S STILL AT A VERY EARLY STAGE. AND WE ARE MOVING SLOWLY, SLOWLY, SLOWLY TOWARD MATURITY OF THE DATA BUSINESS. SO THAT MATURITY WILL ACTUALLY CREATE A LOT OF NUANCES AROUND AUTOMATICALLY. AND GET SOME KIND OF RULES OF THE GAME IN PLACE. AND I BELIEVE THAT OPENING WILL CREATE A LOT OF BUSINESS OPPORTUNITY. AND BUSINESSES WHICH ARE MORE RESPONSIBLE BUSINESSES. I THINK THAT IN THE COMING DAYS, IT’S NOT GOING TO AFFECT ADVERSELY. IT’S GOING TO BE AFFECTING CREATING MORE POSITIVE ATMOSPHERE FOR THE BUSINESS.>>AMAZING. SO WE TALKED A LITTLE BIT TODAY ABOUT IT’S THE BUSINESS’ RESPONSIBILITY TO BUILD TRUST INTO THEIR PIPELINE.>>YEAH.>>AND REGULATIONS AREN’T NECESSARILY GOING TO KEEP UP. WE’VE TALKED A LITTLE BIT ABOUT THE VALUE EXCHANGE BETWEEN CONSUMERS AND BUSINESSES. AND THE WAY THAT MIGHT NEED TO CHANGE WITH DIFFERENT BUSINESS MODELS, PREMIUM MAY NO LONGER WORK IF ADVERTISING ISN’T NECESSARILY PLAUSIBLE. WE’VE TALKED ABOUT THE CHANGE THAT THE GEOPOLITICAL WORLD MIGHT EXPERIENCE AS DATA MAY OR MAY NOT FLOW BETWEEN COUNTRIES. AND WE HAD TO WRAP IT UP IN JUST A COUPLE OF WORDS. WHAT WOULD YOU SAY EVERYONE NEEDS TO BE THINKING ABOUT AND DOING IN THEIR BUSINESSES TO BE PREPARED AS THIS SITUATION EVOLVES? I’M GONNA GO STRAIGHT DOWN THE LINE STARTING BUT, ALISA.>>WELL, I’LL END WHERE I BEGAN. REALLY WE THINK THAT TRUST IS THE NEW CURRENCY. AND THINKING ABOUT PRIVACY AS REALLY A CUSTOMER EXPERIENCE ISSUE. AND THAT’S REALLY THE WAY TO GO FOR EVERYONE, I THINK.>>YEAH. AND I THINK FOR BUSINESSES, RIGHT, NOT ONLY FOR ENTREPRENEURS, THAT THERE ARE ALWAYS BUSINESS OPPORTUNITIES. PEOPLE HAVE ALREADY STARTED BUSINESSES, THEY HAVE TO THINK ABOUT HOW TO SOLVE THEIR DW THEIR ISSUES OF A PERSONAL LEVEL, I THINK YOU NEED TO THINK ABOUT HOW MUCH YOUR DATA IS USED BY THE GOVERNMENT, RIGHT? IF YOU GO TO U.K., YOUR PICTURE GETS TAKEN EVERY FIVE SPECTACULAREDS OR SOME CRAZY STATISTIC. SO YOUR DATA OUT THERE, AND WHAT HAPPENS TO THAT?>>I WOULD SAY THAT DATA IS AT THE CORE OF OUR LIVING. SO LET’S MAKE IT CONSCIOUS, SHARE WHAT WE NEED TO SHARE, AND MAKE USE OF THE DATA AND UPDATE OUR BUSINESS MODELS.>>AMAZING. EXCELLENT CONVERSATION. THANK YOU ALL FOR YOUR TIME THIS AFTERNOON. AND THAT’S IT. CHEERS.>>THANK YOU.>>THANKS A LOT.>>THANK YOU.>>HI AGAIN. HOW’S EVERYONE’S ENERGY LEVEL? ALL RIGHT. RIGHT NOW THE BREAK ROOM, WE HAVE A FANTASTIC PRESENTATION FROM SAP’S CHIEF DES FUTURIST ON HOW TO STAND THE CUTTING EDGE OF INNOVATION. ME WELCOME OUR PANELISTS, MARGO CASA LAINA, AND THE COFOUNDER OF REALITY ENGINE. THEY’RE TALKING WITH EDITOR BRIAN HADER.>>THIS IS THE PART OF THE DAY WHERE I THINK THE ENERGY REALLY STARTS FLAGGING FOR PEOPLE. YOU’VE HAD YOUR ROCKSTAR.>>I’M GOOD.>>WE’RE GONNA KEEP THE ENERGY HIGH. ONE OF THE MORE FASCINATING TOPICS OF THE DAY TODAY, WE’RE GONNA BE TALKING ABOUT AI. I’M GONNA START WITH YOU, MARCO, SINCE YOU’RE CLOSEST TO ME. WHAT ARE THE BIGGEST PAYING POINTS FOR GETTING COMPANIES TO ADOPT AI TECHNOLOGY?>>ALL RIGHT. WELL, THE BIGGEST PAYING POINT IS THAT A LOT OF COMPANIES DON’T EVEN KNOW WHERE TO GET STARTED. THEY WANT TO USE THIS COOL AI, MACHINE LEARNING STUFF, AND THEY DON’T EVEN KNOW WHERE TO START.>>THEY COME TO YOU, I HEARD ABOUT THIS AI THING.>>A LOT OF TIMES. IT DOES HAPPEN A LOT, ACTUALLY. AND & BECAUSE I’M WITH SALESFORCE, SO A LOT OF TIMES I MEET WITH A LOT OF LARGE, ESTABLISHED COMPANIES. AND I ALWAYS SAY, IT STARTS WITH THE QUESTION. WHAT IS THE QUESTION THAT YOU WANT ARTIFICIAL INTELLIGENCE TO ANSWER? IF YOU CAN ANSWER WITH THAT, IF YOU HAVE A CONCRETE QUESTION IN MIND, YOU CAN GET PAST THAT POINT. BUT A LOT OF PEOPLE GET HUNG UP THERE. ABSOLUTELY.>>GREAT. LET’S START ON A POSITIVE NOTE. WHAT ARE SOME OF THE GOOD EXAMPLES OF ENTERPRISE COMPANIES DOING AI RIGHT?>>AN EXAMPLE IS CAPITALONE. IT’S ONE OF THE MORE, I WOULD SAY AI-FIRST COMPANIES. BUT THINKING ABOUT THE AI LEADER, YOU’RE THINKING ABOUT THE PHONE COMPANY, RIGHT? AND COMPANIES LIKE SAMSUNG, TRYING TO FOCUS ON AI. AND ALSO INFUSING AI INTO PRETTY MUCH EVERY PART OF THEIR CUSTOMER EXPERIENCE. SO IF WE LOOK AT BOTH THESE COMPANIES, SAMSUNG AND CAPITAL ONE, THEY’VE INFUSE TODAY INTO THE SUPPLY CHAIN, WHEN IT COMES TO SAMSUNG. AND INTO BANKING IN A REALLY GOOD WAY WHEN IT COMES TO CAPITAL ONE.>>SOMETHING TO ADD TO THAT?>>I THINK ANOTHER ONE THAT SPRINGS TO MIND IS ANOTHER BANK WHICH IS AMERICAN EXPRESS. I THINK FOR GOOD REASON, THE FINANCIAL SERVICES COMPANIES WERE AMONGST THE FIRST. THEY WERE DOING MACHINE RUNNING BEFORE IT WAS COOL, AT LEAST FOR FRAUD PROTECTION. AND OCCASIONALLY FOR HIGH-FREQUENCY TRADING, WERE SOME OF THE FIRST COMMERCIAL APPLICATIONS OF MACHINE LEARNING WHEN IT WAS TOO EXPENSIVE TO BE MUCH GOOD FOR MOST OTHER USES. AND SO IT’S MAYBE NOT A SURPRISE THAT THE BANKS ARE A LITTLE BIT AHEAD OF EVERYBODY ELSE, OTHER THAN BIG TECH.>>AND WHY IS FINANCE SUCH A GREAT PLACE TO START FOR AI?>>THEY GOT A LOT OF DATA.>>YEAH.>>AND THAT DATA IS OFTEN CLEAN. I THINK THE BIG OBSTACLE — I THINK MARCO IS 100% RIGHT WHEN HE SAYS THE BIG OBSTACLE TO GETTING STARTED WITH AI IS KNOWING WHAT YOU WANT AI FOR. THE TECHNOLOGY. IT’S LIKE WHERE SHOULD I GET SOFTWARE?>>THE SOLUTION TO THE PROBLEM.>>FOR SURE. ONCE YOU HAVE A PROBLEM IN MIND, AND ASI A GOOD FIT TO SOLVE IT, THE FIRST THING YOU NEED IS A LOT OF DATA. DATA THAT’S IN THE RIGHT FORMAT. DATA THAT’S CLEAN, CONSISTENT, AND RELIABLY — HAS A RELIABLE PIPELINE SO AS MORE DATA COMES IN, YOU CAN ABSORB IT AND CONSUME IT.>>WHEN WE’RE TALKING ABOUT THESE LARGE AND IN MOST CASES OLD INSTITUTIONS, YOU’RE FINDING THAT IN SPITE OF THE LARGE BUREAUCRACY THERE, THAT THEY’RE ABLE TO BE PRETTY NIMBLE WHEN IT COMES TO ADOPTING ASNI>>THE FUNNY THING IS BANKS HAVE BEEN DOING DATA SCIENCE, AND INSURANCE COMPANIES TOO, HAVE BEEN DOING WHAT WE NOW CALL DATA SCIENCE ALL ALONG. THEY USED TO CALL THEM ACYEARS. ACTUARIES. BUT THAT’S THE FOUNDATION OF WHAT WE NOW KNOW AS MACHINE LEARNING. WE CALL IT ALL THIS SEXY STUFF NOW, BUT IT’S THE SAME THING.>>YOUR QUESTION IS HAVE THEY BEEN FASTER THAN EVERYBODY ELSE. I DON’T KNOW IF THAT’S TRUE. I THINK THEY JUST STARTED EARLIER.>>YEAH.>>BUT SOME OF THEM CERTAINLY HAVE BEEN FAST. LIKE CAPITAL ONE AND AMERICAN EXPRESS.>>YEAH, I GUESS THE QUESTION IS THEY HAVE BEEN DOING A GOOD JOB OF GETTING OUT OF THEIR OWN WAY WHEN IT COMES TO ADOPTING TECHNOLOGIES. SO I ASSUME A SMALL PERCENTAGE OF PEOPLE IN THE AUDIENCE TODAY ACTUALLY WORK FOR BANKS. WHAT ARE SOME OF THE LOW-HANGING FRUITS BEYOND THAT,?>>MARKETING. AND MARK OPERATIONS. IF YOU THINK IF IT’S SOMEBODY WHO IS TOTALLY NOT A BANK IS THE INDIANA PACERS. THEY DO GENERATE A LOT OF MONEY.>>YEAH.>>AND A LOT OF DATA. BUT A LOT OF THEIR DATA SCIENTISTS ARE FOCUSED ON THE BASKETBALL, NOT THE MARKETING OPERATIONS. BUT THEY APPLY, THEY USE ONE OF OUR PRODUCTS TO APPLY A RELATIVELY SIMPLE QUESTION. IF I SEND YOU AN E-MAIL, YOU ARE GONNA OPEN IT OR NOT? IN MARKETING, BECAUSE YOU USE THESE SYSTEMS TO AUTOMATE YOUR MARKETING OPERATIONS, IT TENDS TO GATHER UP A BUNCH OF DATA. AI CAN ANSWER THOSE QUESTIONS PRETTY QUICKLY AND CLEANING. MARKETING IS ONE PLACE WHERE A LOT OF COMPANIES THAT ARE NOT BANKS OFTEN GET STARTED WITH AI SUCCESSFULLY.>>IT’S ALMOST OBVIOUS. IF YOU THINK OF THE TWO BIGGEST AI SYSTEMS IN THE WORLD, I THINK OF YOUTUBE AND THE FACEBOOK NEWSFEED, ACTUALLY. WHEN YOU’RE THINKING ABOUT CUSTOMER EXPERIENCES, YOU INSTINCTIVELY KNOW IF YOU PERSONALIZE THE CUSTOMER EXPERIENCE, YOU WILL HAVE SOME SORT OF AN LIFT. SO PERSONALIZATION I THINK IS A REALLY KEY AI APPLICATION.>>SO USING, ESSENTIALLY, MACHINES TO OFFER THE HUMAN TOUCH.>>YES, YEAH.>>YEAH.>>AND I’M A VENTURE CAPITALIST. SOMETHING WE LOOK AT A LOT IS WHEN A MARKET READY TO ADOPT AI? SOME OF IT IS ABOUT THE TECHNOLOGY BEING READY TO SOLVE THE PROBLEM. WE THINK MORE OF IT IS ABOUT WHETHER A CERTAIN MARKET OR BUYER IS READY TO ACCEPT THE RISK OF AI. AND THE RISK OF NOT NECESSARILY A BINARY GUARANTEED, YES OR NO ANSWER. AI IS A LOT MORE FUZZY, IT’S MORE PROBABILISTIC. IT’S GONNA HAVE A CONFIDENCE INTERNATIONAL. CONFIDENCE INTERVAL. SO WHEN YOU TURN A DECISION OVER TO AN AI, AND NOT A HUMAN BEING OR A RULE, YOU HAVE TO ACCEPT A WORLD WHERE IT’S NOW FULLY AUTOMATED BUT IT’S GONNA BE WRONG SOME OF THE TIME. THE SAFEST, LEAST RISKY PLACE TO START WITH THAT IS IN A LOT OF THESE PERSONALIZATIONS. WHEN NETFLIX RECOMMENDS A MOVIE, IF THEY’RE RIGHT, AWESOME. I WATCH MORE MOVIE, NETFLIX WINS, THE CUSTOMER WINS. IF THEY’RE WRONG, NO WORSE OFTEN THAN IF THERE HADN’T BEEN A RECOMMENDATION. SAME WHEN WE BUILT THE NEWSFEED, IF I GET THE CAT PHOTO BEFORE THE BABY PHOTO, AND THAT’S WHAT YOU WANTED, GREAT. IF IT’S IN THE WRONG ORDER, WELL, THERE’S A RANDOM ORDER SO I’M NOT DOING HARM. THAT’S WHAT WE WERE THINKING IN 2010. I DON’T KNOW. THE WORLD MAY PROVE THAT WE WERE WRONG ABOUT THAT.>>YOU’RE SPEAKING ABOUT SOMEBODY WHO HAS EXPERIENCE WITH FACEBOOK.>>YES, MY FIRST BIG PROJECT IN FACEBOOK IN 2010 WAS ADOPTING TECHNOLOGY FOR THE NEWSFEED RANKERS. THAT WAS A GREAT INTRODUCTION TO THE COMPANY AND THE WORLD. AS WE ENTER ENTERPRISE USE CASES, MORE IS AT STAKE, SALES AND MARKETING ARE NOT A GOOD PLACE TO START BECAUSE THERE’S ALL THIS UPSIDE IF I MAKE YOUR MARKETING PROGRAMS MORE EFFECTIVE BUT NOT A LOT OF DOWNSIDE.>>YEAH. IT HAS A LOT OF DOWNSIDE FOR BANKS, RISK FOR BANK, RIGHT?>>THERE’S A RISK IN APPROVING LOANS BUT IF YOU’RE JUST LOOKING FOR FRAUD, IF I FIND MORE FRAUD, GREAT. IF I CREATE A LOT OF SPURIOUS ALERT, THAT’S NOT AWESOME. BUT IT’S OKAY WHEN YOUR BANK CALLS YOU AND SAYS WAS THIS FRAUD AND YOU SAY NO. YOU FEEL SAFE WHEN THAT HAPPENS. SIMILAR TO MARK, IF IT WORKS BETTER, IT’S A GREAT UPSIDE. AND SO THAT’S TRUE, I THINK OF ENTERPRISE ADOPTION OF AI. PEOPLE ARE PRONE TO EXPERIMENT FIRST IN PLACES WHERE IT’S SORT OF A CONVEX — IF IT WORKS OUT, IT GIVES ME A BUNCH OF UPSIDE BURK IF IT DOESN’T, I’M NOT ANY WORSE OFF THAN IF I DIDN’T TRY IT. I THINK WE’RE NOW ENTERING THE PLACE WHERE AI IS MORE TRUSTED AND WE’RE STARTING TO SEE PEOPLE BEING REALLY WILLING TO USE AI FOR MORE SIGNIF FUNCTIONS. WE’RE SEEING MANUFACTURING START TO USE FOR YIELD OPTIMIZATION, RETAIL START TO DO MERCHANDISING AND FORECASTING. I’M SURE BINDHU CAN TALK ABOUT THE DIFFERENT USE CASES WITH HER CUSTOMERS. AND I THINK THERE ARE APPLICATIONS IN FRONT OF US, PUTTING HIGH RISK AND HIGH REWARD, HIKE HUM HEALTH, CLIMATE CHANGE, LIKE HUMAN HEALTH, CLIMATE CHANGE, SO IT’S A RACE, I THINK. AND I THINK THE TECHNOLOGY WILL BE READY A LITTLE BEFORE SOCIETY IS READY TO ADOPT IT. MAYBE THAT’S OKAY.>>YEAH, I THINK WHAT MARCO WAS ALLUDING TO AT THE BEGINNING, PROBABLY EVERY SINGLE COMPANY RIGHT NOW IS CHAMPING AT THE BUILT TO IMPLEMENT IT IN SOME WAY. WHAT ARE SOME EXAMPLES WHERE THE TECHNOLOGY HASN’T REALLY CAUGHT UP? WHAT ARE SOME EXAMPLES WHERE IT’S JUST TOO RISKY TO ATTEMPT TO IMPLEMENT AI?>>I’M GONNA START WITH SOMETHING WHICH IS CLOSE TO MY HEART, FORECASTING. I’M NOT GONNA SAY IT’S RISKY. IT’S MORE — YOU WANT TO THINK ABOUT IT IN, I WOULD SAY, IN A SMART MANNER. A LOT OF PEOPLE, ESPECIALLY A LOT OF MANUFACTURING COMPANIES AND RETAIL COMPANIES LOVE FORECASTING. BECAUSE YOU WANT TO BE ABLE TO PLAN AHEAD, YOU WANT TO FORECAST EXACTLY HOW MUCH OF WHAT ITEM YOU WANT TO STOCK. YOU WANT TO PERSONALIZE THEM BETTER. YOU WANT TO FIGURE OUT EXACTLY HOW MUCH RAW MATERIAL YOU NEED. AND USUALLY THE PROMISE OF FORECASTING THINGS RIGHT IS YOU KNOW EXACTLY HOW YOUR BUSINESS IS GOING TO GO. WHO DOESN’T WANT A FORECAST? IN A LOT OF COMPANIES, THEY COME TO US AND TALK TO US ABOUT, HEY, I WANT FORECASTING AND I WANT IT TO BE 100% CRAT. 100% ACCURATE.>>YEAH.>>AND THAT’S NOT GOING TO HAPPEN. EVEN 30% TO 40% ARE VERY, VERY COMMON. HOW YOU IMPLEMENT THE AI, AND HOW YOU ACTUALLY WORK IT INTO YOUR PROCESS IS GOING TO BE REALLY IMPORTANT. SO I WOULD SAY THAT’S SOMETHING WHICH — WHILE PEOPLE ARE REALLY CHOMPING AT THE BIT TO GO AND IMPLEMENT, YOU WANT TO THINK TWICE ABOUT HOW EFFECTIVE YOUR FORECASTING ALGORITHMS ARE AND HOW MUCH DATA YOU’VE GOT.>>YEAH, AND I THINK KEY TO THAT, I KNOW YOUR COMPANY IS WORKING ON ONE THING, WE’RE WORKING ON IT WITH EINSTEIN AS WELL, TELLING YOU. WHY WHEN WE’RE MAKING A RECOMMENDATION, A PREDICTION, IN MANY CASES WE HAVE TO TELL YOU WHY IS IT MAKING THAT RECOMMENDATION? AND THAT NEED FOR THE WHY IS PROPORTIONAL TO THE WEIGHT OF THE DECISION. IF IT’S LIKE FRAUD, LIKE WHY IS YOUR BANK CALLING BUT YOUR CARD? IT DOESN’T MATTER, RIGHT? IT WAS A LEGITIMATE CHARGE, WHO CARES, RIGHT? VERSUS WHY ARE YOU MAKING THIS MEDICAL DIAGNOSIS?>>YEAH.>>UH-HUH.>>WE’RE NOT DOING THAT WITH EINSTEIN, BUT IN ANY CASE, THAT’S A VERY HEAVY DECISION. OR JUDICIAL BAIL-SETTING DECISIONS. ALSO SOMETHING I’M NOT FOND OF DOING BY THE WAY. BUT THESE ARE VERY WEIGHTY DECISIONS. AND THAT AI SYSTEM HAD BETTER TELL YOU EXACTLY WHY IT’S ARRIVING AT THAT RECOMMENDATION.>>GETTING BACK TO THIS IDEA THAT IT’S CLEARLY SOMETHING THAT EVERYBODY WANTS. HOW DO YOU WEED OUT THE FAKES, THE NONSENSE?>>WELL, I THINK — THERE’S SOME OF THAT IN ANY BUSINESS.>>SURE.>>YOU DON’T THINK THAT’S THE CASE WITH AI RIGHT NOW?>>THERE’S SO MUCH INTEREST AND DEMAND FROM INVESTORS THAT IT CREATES AN ALMOST OVERWHELMING IMPERATIVE FOR EVERY START-UP TO TRY TO APPROXIMATION THEM AS KNOWING AI-RELEVANT. THEY TRY TO SAY WE HAVE THIS GREAT SOFTWARE, AND IT SOLVES ALL THESE PROBLEMS FOR CUSTOMERS. AND AI, WE’LL COLLECT THIS INTERESTING DATA, AND WE’LL BE ABLE TO DO SOMETHING WITH IT DOWN THE LINE. AND AIL OF THEM MAY BE RIGHT. BUT IF ASI SOMEWHERE OUT THERE IN THEIR ROADMAP, THEN PROBABLY ASI NOT CENTRAL TO THE VALUE PROPOSITION THEY OFFER CUSTOMERS. SO THAT’S A BIG FILTERING FUNCTION FOR ME. I’M NOT JUST THERE TO INVEST IN ANY OLD START-UP. I’M GONNA INVEST IN AI-FIRST START-UPS. IF ASI NOT CENTRAL TO WHAT THEY DO, THEN I’M NOT THE RIGHT FIT AS AN INVE AS AN INVESTOR. I WOULD SAY THE OTHER THING THAT IS A LITTLE BIT CLEAR, SOMETIMES YOU’RE TALKING TO SOMEBODY PREPRODUCT, AND THEY’RE TELLING YOU ABOUT WHAT THEY WILL BUILD OR WHAT THEY WILL DO WITH THEIR DATA. WHEN THEY START DESCRIBING TO YOU SOMETHING THAT A HUMAN COULD DO IF THEY HAD INFORMATION LIKE THAT, AND IT SOUNDS MORE LIKE A MANAGEMENT CONSULTANT THAN IT DOES LIKE A MACHINE, THEN I ALSO KNOW THAT I’M PROBABLY NOT DEALING WITH SOMEBODY WHO KNOWS HOW TO BUILD WHAT THEY’RE DESCRIBING. BECAUSE I WISH OUR INDUSTRY HAD LANDED ON A DIFFERENT TERM THAN AI. IT MAKES US ALL THINK OF SCIENCE FICTION.>>YEAH.>>AND THAT’S NOT WHAT THIS TECHNOLOGY IS. I LIKE THE TERM MACHINE LEARNING MUCH BETTER. IT’S REALLY STATISTICAL ANALYSIS. THE MACHINE DOESN’T UNDERSTAND IN ANY MEANINGFUL SENSE OF THE WORD. SO I THINK THAT’S ACTUALLY A PRETTY COMMON TONE OF FOUNDERS WHO ARE TRYING TO BE AI’ISH, WITHOUT BEING SOMEONE LIKE BINDHU WHO IS ACTUALLY AN EXPERT.>>YOU DON’T WANT PEOPLE THINKING TERMINATOR.>>NO, RIGHT?>>THE SAME QUESTION TO PUT TO SCRIPT, YOU WERE ON THE OTHER SIDE OF THAT TABLE.>>RIGHT.>>YOU ARE CONSTANTLY TALKING TO VCY’S ABOUT YOUR COMPANY. I GUESS THIS IS A VERY BROAD QUESTION.>>BEST PART OF OUR JOB.>>HOW DO YOU CONVINCE THEM THAT WHAT YOU’RE DOING IS VIABLE?>>IT’S A GOOD QUESTION. BECAUSE RIGHT NOW, JOCELYN’S POINT AND TO YOUR POINT TOO, THERE’S A LOT OF NOISE IN THE MARKET. SO WHENEVER I SAY WHATEVER, I SAY WE’RE DOING X ARBITRATION Y ARBITRATION AND Z, THEY TELL ME THERE ARE A HUNDRED OTHER COMPANIES DOING THE EXACT SAME THING.>>YES.>>SO HOW DO YOU CONVINCE THEM? THERE’S THREE ASPECTS TO CONVINCING THEM, RIGHT? THE 71ST TECHNOLOGY. YOU HAVE TO HAVE SOME TECHNOLOGY. WHICH YOU CAN ACTUALLY SHOWCASE. SO IF YOU’RE AT THE STAGE IN A START-UP WHERE YOU HAVE TECHNOLOGY THAT IS OUTPERFORMING AND GENERATING VALUE FOR CUSTOMERS, IF YOU CAN PROVE THAT, IF YOU CAN SAY HERE ARE MY TWO OR THREE CUSTOMERS, AND HERE IS MY TECHNOLOGY WHICH GOT APPLIED TO THESE CASES, THAT’S FANTASTIC. SO THERE IS VALUE THERE. THE SECOND ASPECT OF THIS IS, AT LEAST IN OUR CASE, WE ARE DOING SOME AI RESEARCH. SO ACTUALLY HAVING AI RESEARCH AND ORIGINAL WORK CAN CAN BE WEATHERED BY PEERS, THAT’S OBVIOUSLY A REALLY GOOD SIGN. AND THE THIRD ASPECT, IF YOU DON’T HAVE THESE FIRST TWO THINGS, BECAUSE YOU HAVE TO RAISE FUNDING IN MOST CASES, YOU’RE GOING BACK TO YOUR COSTS AND SAYING, HEY, HERE’S WHAT I’VE DONE AS A FOUNDER. AND HERE’S WHAT I THINK I’M GOING TO DO IN THE FUTURE IS GOING TO BE SUCCESSFUL. SO YOU HAVE TO HAVE SOME POINTS TO CONVINCE THESE INVESTORS.>>I’M GONNA LEAVE THIS OPEN FOR EVERYBODY BECAUSE I SUSPECT I CAN GET SOME DISTINCTLY DIFFERENT ANSWERS FROM EACH OF YOU. BUT WHAT ARE SOME KEY OPPORTUNITIES FOR STARTED UPS TO GET INVOLVED IN IN THIS SPACE?>>I CAN GO FIRST. MY FAVORITE OPPORTUNITY, REALLY, IS ENABLING ENTERPRISES WITH AI. TO LOOK AGAIN. LOOK AT THE SCIENCE COMPANIES. I LIKE CALLING THEM SCIENCE COMPANIES BECAUSE OBVIOUSLY THEY HAVE HAD ASTRONOMICAL GROWTH. BUT THEY’RE ALL AI COMPANIES, RIGHT? AND THEY’VE ADOPTED DEEP LEARNING. IF YOU LOOK AT THE STANDARD ENTERPRISE, THEY’RE VERY FAR FROM ADOPTING IT. SO COMPANIES WHICH ENABLE THESE ENTERPRISES TO ADOPT AI, I THINK THAT’S A HUGE OPPORTUNITY.>>I WOULD SAY THE REAL OPPORTUNITY FOR A START-UP IS SELL THE SOLUTION, NOT THE TECHNOLOGY. DON’T SELL THE DEEP LEARNING OR THE ALGORITHMS OR ANY OF THAT STUFF. WHAT DO YOU ACTUALLY DO?>>YEAH.>>ARE YOU PREDICTING CHURN, ARE YOU PUTTING UP A CHECK BOT OR SOME FANCY NATURAL LANGUAGE THING? DO THAT AND INTEGRATE IT INTO TOOLS THAT PEOPLE ARE ALREADY USING, LIKE SALESFORCE. DON’T JUST BE IN YOUR OWN LITTLE ATOMIC LAND OVER THERE. THAT’S WHERE THE OPPORTUNITY REALLY IS. TO SELL SOME ARTIFICIAL INTELLIGENCE, MACHINE LEARNING THAT ACTUALLY WORKS AND DOES SOMETHING THAT SOMEBODY CAN UNDERSTAND.>>I’M GLAD YOU’RE GOING LAST. I FEEL LIKE YOU’RE BEST-POSITIONED TO ANSWER THIS QUESTION.>>OH, MY GOSH. I COULDN’T AGREE BETTER WITH BOTH OF THEM. MY FIRM LITERALLY EXISTS TO ENABLE START-UPS WHERE THEY ARE WITH AI. AND I COULDN’T AGREE MORE WITH MARCO IT’S TOO HARD FOR HUMAN BEINGS TO MANAGE. AND IF WE CAN USE AI TO BETTER MANAGE THE INFRASTRUCTURE ITSELF, THEN WE’RE, THEN IT’S A FORCED MULTIPLIER FOR EVERY OTHER THING WE WANT TO DO WITH TECHNOLOGY TO SERVE THE WORLD. >>ONE FINAL QUESTION REAL QUICK. LEAVE IT OPEN TO ANY ONE OF YOU AGAIN. WHAT’S THE BEST WAY TO GO ABOUT HIRING AI SPECIALISTS? >>EASIER SAID THAN DONE. >>ALREADY KNOW A LOT OF THEM, AND BE AN AI LUMINARY THEY WANT TO WORK WITH. >>WE’RE SALES FORCE AND WE HAVE A LOT OF DEVELOPERS ALREADY. A LOT OF PEOPLE ARE REALLY EXCITED TO GET INTO THIS WORLD. IT’S GETTING EASIER AND EASIER TO DO. YOU DON’T HAVE TO HIRE A DEEP LEARNING EXPERT TO DO DEEP LEARNING. YOU KNOW, PEOPLE CAN BECOME THAT. AND SO HIRE SMART PEOPLE, CREATIVE PEOPLE. >>I WOULD AGREE WITH THE TRAINING THING. IT’S IMPOSSIBLE TO GET SO MANY EXPERTS. SO YOU WANT TO TRAIN THEM. HIRE A COUPLE OF EXPERTS, AND HIRE SMART PEOPLE YOU CAN TRAIN. >>THAT’S GREAT. WE’RE OUT OF TIME. THANK YOU SO MUCH. >>THANK YOU. >>THANK YOU. >>WE ARE GOING TO TAKE A SHORT BREAK RIGHT NOW, BUT PLEASE DO COME BACK FOR ANOTHER DISCUSSION ON THE CUSTOMER EXPERIENCE. FIRE SIDE CHAT WITH ANDREA CHUNG, WHO I KNOW MANY OF YOU KNOW. PLEASE BE BACK IN YOUR SEATS BY 3:15. THANKS. >>>LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS. THE PROGRAM WILL BEGIN IN TWO MINUTES. LADIES AND GENTLEMEN, PLEASE TAKE YOUR SEATS. THE PROGRAM IS ABOUT TO BEGIN. LADIES AND GENTLEMEN, PLEASE WELCOME BACK TO THE STAGE, TECH CRUNCH SILICON VALLEY EDITOR, CONNIE LOIASAS. >>IF YOU HAVE QUESTIONS ABOUT HOWTO MAKE MONEY IN THE ENTERPRISE BASE, AND I’M GUESSING SOME OF YOU DO, WE HAVE TWO BC’S WHO ARE GOING TO BE TALKING TO YOU IN THE BREAK ROOM IN ABOUT 15 MINUTES. BUT STARTING RIGHT NOW, WE’RE GOING TO BE TALKING ABOUT THE TRIALS AND TRIBULATIONS OF EXPERIENCED MANAGEMENT, WITH OUR PANELISTS. JULIE LARSEN GREEN. AND PETER RINEHART. THEY’RE TALKING TODAY WITH RON MILLER OF TECH CRUNCH. THANK YOU. >>HI EVERYBODY. ALL RIGHT. MAKE YOURSELVES COMFORTABLE. >>THANK YOU. >>DO YOU WANT SOME WATER? >>SURE. >>ALL RIGHT. SO GOOD AFTERNOON. HOW’S EVERYBODY DOING OUT THERE? HOPE YOU’RE ENJOYING THIS AS MUCH AS I AM. EVERY CUSTOMER DESERVES A GREAT EXPERIENCE. I THINK WE CAN ALL AGREE ON THAT, RIGHT? >>EXACTLY. >>BUT AS WE GATHER MORE DATA ABOUT OUR CUSTOMERS, THE SOURCES CAN BE FRAGMENTED, AND PULLING THAT AMOUNT OF INFORMATION TOGETHER, TO BUILD A COHERENT CUSTOMER CAN BE DIFFICULT. JUST THE MAKEUP OF OUR PANEL SHOWS HOW BROAD THIS SUBJECT REALLY IS. SO WELCOME TO YOU ALL. SO WE’RE GOING TO START OFF WITH YOU. >>GREAT. >>YOU KNOW THE BROWSERS ARE CERTAINLY MAKING IT MORE DIFFICULT TO TRACK USERS, RIGHT? SO I’M WONDERING WHAT IMPACT THIS WILL HAVE ON YOUR CUSTOMERS’ ABILITY TO HANDLE DATA MOVING FORWARD. >>IT’S A QUESTION THAT COMES UP A LOT. I WOULD SAY IT’S BROADER THAN JUST BROWSERS. IF YOU LOOK AROUND THE LANDSCAPE, PRIVACY IS AT THE CENTER OF THE DISCUSS, AS IT SHOULD BE. WHETHER IT’S GPR, WHETHER IT’S LAWS IN CALIFORNIA. WHETHER IT’S TRACKING, APPLE IS IMPLEMENTING SAFARI, THERE’S ALL KINDS OF CHANGES COMING. NUMBER 1, FROM THE ADOBE POINT OF VIEW, PRIVACY IS FIRST AND FOREMOST. EVERYTHING WE DO THROUGH A BRAND IS HOW WE PUT PRIVACY FRONT AND CENTER. AND TO SOME EXTENT YOU’RE RIGHT. THEY HAVE TO DO IT IN A WAY THAT EVERY CONSUMER KNOWS WHAT’S BEING COLLECTED. IF YOU THINK ABOUT IT MORE BROADLY, THE AMOUNT OF DATA COMING OUT IN GENERAL IS EXPLODING. SO YES, IF YOU LOOK AT THIS BROWSER IMPLEMENTATION, OR THAT. BUT IF YOU LOOK AT THE WORLD WE’RE LIVING IN, AND WHAT OUR CUSTOMERS ARE EXHIBITING, WHETHER THAT’S THROUGH YOUR ALEXA DEVICE, OR TESLA, JUST A SHEER AMOUNT OF THAT CONTINUES TO EXPLODE. THE CHALLENGE WHAT WE’RE TRYING TO SOLVE IS HOW DO YOU BRING ALL OF THAT DATA A TOGETHER. AGAIN, PRIVACY CENTRAL FIRST. BUT HOW DO YOU BRING THAT TOGETHER TO CREATE THE BEST CUSTOMER EXPERIENCE. >>THAT’S FINE. >>YOU GUYS CAN JUST LEAVE. BUT HOW DO YOU DO THAT? I DON’T KNOW, YOU GUYS HAVE PROBABLY BEEN TO EUROPE. YOU OPEN THE BROWSER. IT SAYS YOU HAVE THIS, AND IF YOU’RE LIKE ME, AND YOU OPEN 25 BROWSER TABS EVERY TIME YOU OPEN A SITE, YOU GET THAT WARNING. IT’S JUST LIKE, YOU GLAZE OVER AFTER A WHILE, YOU DON’T REALLY THINK ABOUT IT. IN A SMALL SAMPLE. SOMEBODY WHO DOESN’T DO A LOT OF, YOU KNOW, SEARCHING OR SURFING AS WE USED TO CALL IT, HOW DO YOU KIND OF DELIVER THAT MESSAGE THAT THEY HAVE RIGHTS, YOU KNOW, AND THAT THEY SHOULD BE USING THOSE? >>YEAH, SO IT’S INTERESTING. AGAIN, IT COMES BACK TO WHAT I SAID A LITTLE BIT EARLIER. I THINK YOU HAVE TO DELIVER IN A WAY THAT CONSUMERS UNDERSTAND. PUT IT FRONT AND CENTER, AND IT’S A LOT ABOUT EDUCATION. SO A LOT OF THINGS, TO YOUR POINT, I THINK SOMETIMES CONSENT’S HIDDEN. SOMETIMES PEOPLE DON’T UNDERSTAND WHAT IT MEANS, THEY BROWSE, THEY GLAZE OVER. PEOPLE SAY THIS IS WHAT IT MEANS, FRONT AND CENTER, AND MAKE IT VERY, VERY CLEAR. IF WE DO THAT IN THE RIGHT WAY, THE CONSUMERS COME ALONG FOR THE RIDE, I THINK EVERYBODY WINS. >>SO JULIE, YOUR COMPANY LOOKS AT THIS FROM A DIFFERENT ANGLE. INSTEAD OF COLLECTING THE INFORMATION FROM EXTERNAL SOURCES, YOU GO RIGHT TO THE USER, RIGHT? >>RIGHT. WE DO A LITTLE BIT OF BOTH, YEAH. >>SO HOW DO COMPANIES, HOW ARE THEY USING THAT INFORMATION THAT THEY GATHER TO KIND OF IMPROVE THAT EXPERIENCE? THAT’S KIND OF THE GOAL OF ALL OF THIS INFORMATION GATHERING? >>RIGHT, THE WAY THAT WE THINK ABOUT IT IS, WE DEFINE THE CATEGORY AS EXPERIENCE MANAGEMENT. IF YOU’RE HERE EARLIER, AND YOU SAW BILL TALK, IT’S REALLY ABOUT UNDERSTANDING ALL THE THINGS THAT YOUR COMPANY DOES TO CREATE AN EXPERIENCE FOR CUSTOMERS, AND THAT REALLY STARTS WITH EMPLOYEES, AND THE CULTURE YOU CREATE. THE KIND OF THINGS THAT, HOW THEY FEEL ABOUT WHAT THEY’RE DOING, AND WHAT THEIR GOALS ARE CUSTOMER OBSESSED, OR WHATEVER YOUR CULTURAL GOALS ARE SHOW UP IN THE PRODUCTS AND SERVICES THAT YOU CREATE, AND THEN THE CUSTOMER EXPERIENCE IS ULTIMATELY THE COLLECTION OF PRODUCT BRAND AWARENESS, HOW THEY FEEL ABOUT YOUR BRAND, AND CUSTOMERS. THAT CAN COME FROM THE INFORMATION TO UNDERSTAND THOSE THINGS CAN KIND OF COME FROM EXPLICIT SURVEYS THAT YOU DO FOR PEOPLE, OR YOU ASK THEM QUESTIONS. IT CAN COME FROM SOCIAL MEDIA. IT CAN COME FROM ANYWHERE THAT YOU CAN GLEAN HOW PEOPLE FEEL, AND WHAT BEHAVIORAL SIGNS THAT YOU CAN TAKE IN, AND WE DO ANALYTICS ON TOP OF THAT, TO HELP YOU UNDERSTAND THE DRIVERS. AND ULTIMATELY, WHAT TO DO TO IMPROVE. >>AS SOMEBODY WHO IS ON THEIR COMPUTER ALMOST ALL DAY LONG, AND I’LL GET THOSE KIND OF SIGNALS, LIKE DO YOU WANT TO ANSWER A SURVEY. USUALLY MY ANSWER IS NO. BUT YOU OBVIOUSLY NEED THAT INFORMATION, AND SOME PEOPLE MUST RESPOND. SO HOW DO YOU KIND OF MOTIVATE THEM TO DO THAT? >>SURE. IT DEPENDS ON WHAT’S IN IT FOR YOU AS A CUSTOMER. I THINK THE VALUE EXCHANGE HAS CHANGED OVER TIME. SO GIVING YOU A FIVE, OR A 15, OR 20 QUESTION SURVEY IS NOT REALLY THE WAY THAT PEOPLE ARE GOING TO TAKE THAT TIME AND DO THAT. MAKING IT EASIER, AND SIMPLER, AS YOU’RE BROWSING, FOR EXAMPLE, BEING ABLE TO TAKE A QUICK, DID YOU LIKE THIS, OR DID YOU LIKE THAT, OR A THUMBS UP, OR THUMBS DOWN, THOSE ARE ALL SURVEYS. REINVENTING THE NOTION OF SURVEY TO BE MUCH BROADER, BUT GETTING INPUT THAT HELPS YOU WITH WHAT YOU’RE TRYING TO GET DONE. THEN CREATING THAT RELATIONSHIP WITH YOU, AND HAVING IT PERSONALIZED TO THE WAY THAT YOU LIKE TO BE CONTACTED, OR THE WAY YOU LIKE IT TO SUGGEST TO THE SYSTEM HOW THAT CAN BE BETTER FOR YOU. >>I KNOW PERSONALLY, EITHER I USUALLY RESPOND IF I’M REALLY MAD, OR I WAS REALLY HAPPY. YOU KNOW, ONE OR THE OTHER, IF I’M IN THE MIDDLE, I’M JUST EH. >>THAT’S GETTING IT FROM DIFFERENCE SOURCES. SO AFTER YOU SAY AFTER A GOOD OR BAD CUSTOMER EXPERIENCE, RIGHT AFTER THE TRANSACTION MIGHT BE BETTER OR WORSE THAN WHAT YOU TWEET LATER. BEING ABLE TO CAPTURE THE IN THE MOMENT POSTS, OR EVEN PRE, LIKE YOUR INTENT WHEN YOU WENT IN THERE. NOT JUST LOOKING AT HOW PEOPLE WANT TO FEEL. BECAUSE THAT CAN BE AN INDICATER OF FUTURE SUCCESS. BUT YOU ALSO HAVE TO LOOK AT THE MORE LAGGING INDICATERS. DID THEY BUY, DID THEY ENJOY IT, DID THEY COME BACK, ARE THEY REPEATING? ARE THE EMPLOYEES MORE ENGAGED? DID YOUR ENGAGED HAPPY EMPLOYEES REALLY RESULT IN HAPPY CUSTOMERS? >>I KNOW YOUR PRODUCTS KIND OF HELP PULL THE DATA TOGETHER. YOU HAVE DATA TYPES, RIGHT? SO WHAT IS EXACTLY THE GOAL OF ALL OF THIS DATA GATHERING YOU’RE HELPING YOUR CUSTOMERS DO? >>SO AT A HIGH LEVEL, WHAT OUR CUSTOMERS ARE TRYING TO ACHIEVE IS EITHER DRIVE ANALYTICS OR BETTER MARKETING INFORMATION, OR BETTER MARKETING CAMPAIGNS. BUT YOU THINK ABOUT WHY THEY EVEN NEED THIS DATA PIPING IN THE FIRST PLACE, LOOKING AT A COMPANY LIKE DOLLAR SHAVE CLUB, FOR EXAMPLE. VERY SIMPLE BUSINESS GROWING LIKE A WEED IN THAT DIRECTION. IF YOU THINK ABOUT AN ENTERPRISE, LIKE MANY OF YOU, IT’S VERY COMPLEMENTED. WE HAVE ONE SORT OF MULTINATIONAL CBG CUSTOMER THAT I WAS VISITING LAST WEEK IN THE MIDWEST. YOU KNOW, THEY’VE GOT HUNDREDS OF BRANDS. THEY’VE GOT HALF A DOZEN CEO’S. HALF A DOZEN PRESIDENTS. THEY’RE MANGING ALL THE CUSTOMER EXPERIENCE ACROSS ALL OF THESE DIFFERENT BUSINESS EXPERIENCES, ALL OF THESE DIFFERENT BRANDS. INCREDITABLY COMPLICATED, TO DELIVER A GOOD CUSTOMER EXPERIENCE ON TOP OF THAT. >>HOW CAN YOU TAKE SOMETHING THAT COMPLEX AND PULL IT TOGETHER IN A WAY THAT MAKES SENSE AT ALL? >>SO FOR A SMALL START UP, THEY IMPLEMENT SEGMENT TO COLLECT DATA ON THEIR WEBSITE, THEIR MOBILE APPS, THEIR SERVERS, THEIR PAYMENT SYSTEM, ET CETERA, AND THEY USUALLY DO THAT IN A COUPLE OF DAYS. IN THE ENTERPRISE, IT DOES TAKE A LITTLE WHILE, BUT THEY KIND OF ROLL IT OUT ACROSS THOSE BRANDS, ONE WEBSITE, ONE MOBILE APP AT A TIME. >>IT’S ALL GOOD AND WELL TO HAVE THIS DATA. THE IDEA IS, AS YOU MENTIONED, IS TO GET IT INTO THE HANDS OF THE BUSINESS USER, AND LET THEM USE IT. BUT HOW DO YOU, HOW DO THEY MAKE SENSE OF THAT DATA WHEN THERE’S JUST SO MUCH OF IT? DO YOU WANT TO START? >>I THINK PETER SAID IT REALLY WELL. I THINK A COUPLE OF THINGS. NUMBER ONE, YOU’RE ABSOLUTELY RIGHT, WE TALKED ABOUT THE AMOUNT OF SIGNALS. I THINK THERE’S MULTIPLE USE CASES TO USE THAT DATA. THERE’S A USE CASE AROUND ANALYTICS, AND REPORTING. AND HOW DO I USE THAT? AND CLEARLY, ACTIVATION. I WANT TO TAKE THIS AND CHANGE THE EXPERIENCE. WHETHER IT’S A USER CAMPAIGN, OR A AD CAMPAIGN. USE THAT AND DEPLOY IT TO CUSTOMER EXPERIENCE. THE SYSTEMS THAT GOT US HERE WON’T BE THE ONES THAT GET YOU TO THE FUTURE. ANYTHING THAT WAS DONE MANUALLY, IS JUST NOT GOING TO WORK. WE TALK, A LOT OF PEOPLE SAY AI, ML, LIKE IT’S A BUZZ WORD. BUT THE REALITY IS TRUE. YOU INSIDE TO BE ABLE TO APPLY THINKING TO IT. USING THAT INTELLIGENCE THEN GO APPLY, THE ONLY WAY YOU’RE GOING TO MAKE SENSE OF THE SURE AMOUNT OF DATA, AND ACTUALLY BE ABLE TO DRIVE THIS. >>I TOTE WHETHER TOTALLY AGREE. ONE OF THE OTHER THINGS IS WHEN YOU USE AI, OR ML TO FIGURE OUT WHAT’S GOING ON IN THE SYSTEM, ALSO, IT REALLY HELPS YOU TO UNDERSTAND THE DATA IN A WAY THAT YOU CAN’T DO IT BY MANUALLY READING IT. YOU’VE PROBABLY ALL TAKEN THOSE SURVEYS HOW FEEL ABOUT WORKING FOR YOUR COMPANY, AND THERE’S A VERBATIM SECTION WHERE YOU CAN PUT IN COMMENTS ON YOUR MANAGER. THE OLD DAYS, WHAT DID YOU DO AS A LEADER? YOU TECH SEARCH YOUR NAME, AND FIND OUT WHAT PEOPLE ARE SAYING ABOUT YOU, AND THAT CLOUDED YOUR JUDGMENT ABOUT WHAT YOU WERE REALLY SEEING. WITH THE TOOLS, WITH THE ANALYTICS, THEY WERE UNDERSTANDING THE TEXT, AND SORTING, AND GATHERING, AND FILTERING, AND CORRELATING, AND COLLATING, AND LET YOU KNOW WHAT REALLY IS GOING ON, AND WHAT THE DRIVERS ARE. SO YOUR OWN BIASES ARE KIND OF TAKEN OUT OF IT, AND YOU CAN REALLY UNDERSTAND WHAT THE DRIVERS ARE FOR YOU KNOW, ENGAGEMENT, CUSTOMERS, WHATEVER. IT’S REALLY IMPORTANT THAT YOU HAVE TOOLS, AND YOU CAN HAVE REALTIME MEASUREMENT TOO. SO IT’S NOT A STATIC MEASUREMENT THAT DOESN’T CHANGE VERY OFTEN. SOMETHING LIKE MPS, YOU CAN REALLY FIND OUT WHAT’S HAPPENING IN A QUICK TURN BASIS, AND WE NEED TOOLS FOR THAT. >>I HAVE A SLIGHTLY DIFFERENT PERSPECTIVE. FOR MOST OF OUR CUSTOMERS, THE TRICKY PART IS ACTUALLY GETTING THE DATA READY FOR AIML. I WAS AT A BUSINESS REVIEW WITH ONE OF OUR FORTUNE 500 MEDIA CUSTOMERS, DATA WAS NEVER IN THAT FORMAT. WE WERE ROLLING OUT A NEW FEATURE, THAT YOUR TEAM CAN JUST RUN WITH, AND THAT WAS, FOR THEM, A HUGE BREAKTHROUGH, THAT THEY WOULD ACTUALLY HAVE ALL THE DATA IN A FORMAT THAT THEY CAN USE. IT WAS CLEAN AND CONSISTENT, THAT IS WHERE 90% OF THE WORK COMES IN, AND THAT IS WHERE WE SEE MOST ENTERPRISES STRUGGLING TODAY. >>THE OTHER PLACE PEOPLE STRUGGLE IS ON THE HYPOTHESIS ON WHAT THEY WANT TO LEARN. WHEN YOU TALK ABOUT USING ML, IT’S NOT THAT YOU JUST DUMP A BUNCH OF DATA IN AND SEE WHAT HAPPENS. YOU ACTUALLY HAVE TO HAVE A HYPOTHESIS ABOUT WHAT YOU WANT THE OUTCUP TO BE AND WHAT YOU THINK YOU’RE DRIVING TOWARDS, AND YOU CAN CHECK AGAINST WHAT YOU’RE REALLY DOING, AND CLOSING THOSE EXPERIENCE GAPS WHERE YOU MAY FIND THINGS YOU DIDN’T ANTICIPATE, BUT MORE OFTEN THAN NOT, YOU’RE MEASURING SOMETHING, YOU’RE ALREADY LOOKING FOR. >>IT IS JUST TO BUILD ON PETER’S POINT REAL QUICK. WE DID A, I DON’T WANT TO CALL IT A SURVEY. IT WASN’T A SURVEY. BUT TO EXACTLY YOUR POINT, IT IS TRUE, IF WE GO AND TALK TO THESE REALLY, REALLY EXPENSIVE DATA SCIENTISTS AND PHD’S, HOW WE RECRUIT OUT OF STANFORD, AND MIT, AND THEY’RE GENIUSES. YOU ASK THEM HOW MUCH TIME, YOUR POINT IS SPENT ON JUST GETTING THE DATA READY. IT’S 80, 90%. I COMPLETELY AGREE WITH YOUR POINT. BEFORE YOU’RE GOING TO DO THAT. THERE’S A WHOLE, CALL IT DATA WRANGLING, DATA STITCHING, BUT I AGREE, IT’S A HUGE CHALLENGE, AND WE’RE PAYING VERY, VERY SMART PEOPLE. THEY’RE NOT ACTUALLY ABLE TO DO WHAT YOU’RE PAYING THEM TO DO. THAT’S A HUGE UNLOCK. >>MY FAVORITE QUIP IS THEY SPENT 80% OF THEIR TIME MINING THE DATA AND 20% COMPLAINING ABOUT IT. >>THAT’S REALLY TRUE, ESPECIALLY WHEN IT’S NOT COMING IN ALL NORMALIZED. >>LET’S DIG INTO THAT THOUGH. IN TERMS OF, YOU KNOW OBVIOUSLY, I THINK WE ALL AGREE AI AND ML CAN HELP THE DATA COLLECT PROBLEM, BUT HOW DOES IT DO THAT? HOW IS IT GOING TO HELP PEOPLE, YOU KNOW, UNDERSTAND THE DATA, AND GET TO THAT POINT WHERE SOME OF THAT AUTOMATION IS HAPPENING, AND THINGS ARE BECOMING CLEARER FOR PEOPLE, IN TERMS OF WHAT THEY’RE SAYING. >>I THINK IT’S THE SAME THING. 80% OF THE TIME, PEOPLE ARE DEDICATED INTO JUST TRYING TO ORGANIZE IT. >>I’M NOT JUST TALKING ABOUT THE DATA SCIENTISTS HERE. YOU GET BACK TO THE MG’S. YOU GET BEYOND THE DATA SCIENTISTS AND HOW THE AI, AND ML IS ACTUALLY HELPING THEM BY HAVING THAT UNDERLYING TECHNOLOGY. >>I’M HAPPY TO GIVE MY TWO CENTS. LET’S MAKE IT REALLY TANGIBLE. LET’S TAKE AN END USER, AGAIN, I’M FAMILIAR WITH MY WORLD, WHO MIGHT BE IN CHARGE OF EMAIL CAMPAIGNS. THOSE END USERS, MY JOB IS TO GET MORE PEOPLE TO CLICK ON MY EMAILS, AND I WANT MY CONSUMERS CLICKING ON THEM. WITHOUT AI, THEY’RE WORLD IS, I’LL DO SOME LIGHTWEIGHT AB TESTING, BUT I’LL FIGURE OUT WHAT TO PUT IN THIS SUBJECT LINE. IT TAKES A LONG TIME FOR THEM TO GET TESTS BACK, AND FIGURE OUT, HEY, I’M GOING TO PUT SOME RULES AROUND IT. WHAT DO I PUT IN THE SUBJECT LINE? WHAT THE USER CAN NOW DO, IT HAS BUILT IN AIL CAPABILITIES, TO SAY, WE’VE BEEN LOOKING AT HOW PEOPLE RESPOND. WE’VE BEEN MATCHING THAT TO A WHOLE BUNCH OF INDEPENDENT VARIABLES. BASED ON THAT, WE RECOMMEND THESE SUBJECT LINES. SO IT COMPLETELY CHANGES THE PRODUCTIVITY OF WHAT THEY’RE DOING. JUST ONE EXAMPLE. BUT THAT’S HOW YOU MAKE AI USEABLE TO THE PRACTITIONER. MAKE IT PRACTICAL. HOW DO YOU GIVE THESE SERVICES THAT YOU DON’T HAVE TO BE THE DATA SCIENTIST. EVERYBODY IS TRYING TO FIGURE OUT HOW TO OPTIMIZE SOMETHING IN THEIR JOB. HOW DO I BUILD IT INTO THE CAPABILITIES, AND AFFECTIVELY MAKE YOU MAKE YOUR DO YOUR JOB BETTER. >>THE SYSTEM TELLS YOU, THESE ARE THE DRIVERS FOR CUSTOMER ENGAGEMENT. THESE ARE THE TOPICS THAT CAME UP DURING IT, WOULD YOU LIKE TO SORT AND FILTER? AND YOU CAN COMPARE SEGMENTS OF USERS, AGAINST TOPICS THAT THEY TALKED ABOUT, AND YOU CAN USE THE COMPUTING POWER TO GO AND DO THAT, SO YOU’RE NOT DOING IT MANUALLY. >>SURE. YOU TALKED A LITTLE BIT ABOUT THIS AT THE TOP, PRIVACY IS CENTRAL HERE. WE KNOW HAVE GDPI, OR THE CALIFORNIA PRIVACY ACT COMING ONLINE. I’VE BEEN TOLD THERE’S DOZENS OF SUCH LAWS IN STATES. ALL OF YOUR PLATFORMS WERE CREATED PRE-GDPI. HOW DO YOU COMPLAY WITH THESE PRIVACY LAWS WHEN THE PRODUCTS WEREN’T EVEN CREATED WHEN YOU HAD TO THINK ABOUT THAT. >>THINK ABOUT PRIVACY FROM THE VERY BEGINNING, THINK ABOUT YOU’RE GATHERING DATA FROM PEOPLE. SO THE SYSTEM ALREADY WAS THINKING ABOUT THAT, AND THEN AS THESE NEW THINGS COME IN, HIPPA COMPLIANCE, FED RAMP. GDPR. THE LIST GOES ON. BUT YOU HAVE A SYSTEM THAT YOU IS UNDERSTAND THE DATA, AND PREVENT PEOPLE FROM SEEING THINGS THAT THEY SHOULDN’T SEE, OR ERASE PEOPLE IF YOU NEED TO ERASE PEOPLE. >>THE ONE I WOULD SAY, AND TO YOUR POINT, I RAISED IT AGAIN. I THINK, IF YOU TAKE A HUGE STEP BACK, SO FIRST OF ALL, I THINK GDPR, ALL OF THESE THINGS ARE GOODNESS. HOW DO WE BRING CONSUMERS IN THE RIGHT WAY ALONG ON THIS JOURNEY? I’M ALL ABOUT HOW DO YOU GET MORE VISIBILITY? THAT’S ONE SIDE. IF YOU LOOK AT THE BRAND ENTERPRISE SIDE, THEY ARE STRUGGLING. THEY’RE SITTING THERE SAYING, I’VE GOT GDPR COMING. I’VE GOT ALL OF THESE DIFFERENT SYSTEMS. THEY’RE LOOKING AT IT FROM A POINT SAYING, HEY, HELP ME. EVERYBODY LOOKS AT IT AT A WAY YOU’RE FRAMING IT TO. THERE’S ACTUALLY A HUGE TAIL WIND HERE. I THINK THERE’S A HUGE OPPORTUNITY TO BE A BRAND, WHICH, AGAIN, I THINK WE’RE TRYING TO DO, AND CUSTOMERS SAY HEY, LET US HELP YOU WITH THIS, AND OUR PRINCIPALS ARE ALIGNED ON HOW DO WE MAKE SURE THE CONSUMER HAS THE HEIGHT EXPERIENCE. THAT THEY FEEL THEY’RE TRUSTED, BUT DO IT IN THE RIGHT WAY, AND HOW DO WE? THAT’S OUR RESPONSIBILITY TO BUILD, AND NAVIGATE THE SYSTEMS IN A WAY THAT HELPS YOU, YOU KNOW, DO ALL THESE THINGS IN A RIGHT WAY? THAT’S KIND OF OUR LENS ON IT, AND THERE’S A HUGE AMOUNT OF OPPORTUNITY IF WE DO THIS IN THE RIGHT WAY. >>THINKING ABOUT XM, AND TODAY, ALL THE DATA YOU’RE GATHER SOMETHING IN DIFFERENT SILOS IN THE COMPANY, SO THE SALES TEAM HAS THE CUSTOMER DATA, THE MARKETING TEAM HAS THE BRAND DATA. THE HR PERSON HAS THAT. EVEN INSIDE THE COMPANY, IF YOU CAN CORRELATE THAT ALL TOGETHER, THERE STILL HAS TO BE WHO HAS ACCESS TO THAT DATA, WHO CAN SEE THE PRIVATE EMPLOYEE DATA AS WELL AS THE SENSITIVE SALES DATA. THAT’S WHAT THE CXO, MY ROLE AT QUALTEX. MAKE SURE THAT ALL THE THINGS ARE GOING RIGHT,AND WE’RE PAYING ATTENTION TO ALL THE PRIVACY, AND SECURITY RULES AROUND THAT. >>THERE ARE A LOT OF CIO’S, AND CTO’S, THAT SEE IT AS ANOTHER THING DROPPED IN THEIR LAP, BUT IN REALITY, I WAS TALKING TO A CIO LAST WEEKEND, AND HE ACTUALLY HAD A VERY CLEVER PERSPECTIVE ON THIS, WHICH WAS HE SAID, NEVER WASTE A CRISIS. THIS IS A HUGE OPPORTUNITY FOR US, ACTUALLY, TO GO DRIVE A DIGITAL TRANSFORMATION. WE’VE ALWAYS WANTED TO GO BACK AND CLEAN UP ALL OF OUR FIRST PARTY DATA INFRASTRUCTURE. WE’VE ALWAYS WANTED TO BUILD THE RIGHT PIPES TO HANDLE ALL OF THIS STUFF, AND WE’VE NEVER HAD THE POLITICAL WILL POWER TO GET IT DONE. NOW, ALL OF A SUDDEN THERE’S WILL POWER FROM THE BOARD ON DOWN TO BUILD THIS CORRECTLY, BECAUSE IT’S REQUIRED. SO IN HIS EYES, I THINK THIS IS GENIUS. NEVER WASTE A GOOD CRISIS. LET’S GO PUT IN PLACE BEST IN CLASS TOOLS, AND LET’S MAKE THESE PIPELINES SING FOR ALL THE BUSINESS PURPOSES THAT WE’VE ALWAYS WANTED. >>THEN DATA IS CLEANER. THERE’S ALL KINDS OF BENEFITS. >>YOU CAN SEE IT AS AN OPPORTUNITY. >>THE MORE ACRONYMS, THE MORE BUDGET HE GETS. >>WE’RE TALKING ABOUT A LOT OF DATA HERE, AND IF SOMEBODY WERE TO GET AHOLD OF IT, IT COULD GET PRETTY UGLY, PRETTY QUICKLY. SO WHAT’S YOU’RE PLAN IF DATA LEAKS, WHEN DATA LEAKS TO PLUG THAT UP, AND DO WHAT YOU CAN? YOU GUYS DON’T WANT. >>I THINK SECURITY OBVIOUSLY IS SOMETHING THAT ALL OF US ARE FACING, RIGHT? THERE’S SORT OF ATTACKERS OUT THERE GETTING MORE SOPHISTICATED. THERE’S ALWAYS ON THE PROWL. I THINK THE QUESTION IS HOW DO YOU RESPOND WHEN IT HAPPENS, HOW YOU DEAL WITH IT QUICKLY. HOW YOU TAKE IT DOWN, AND ENSURE THAT YOU’RE CONSTANTLY GETTING BETTER IN THAT ACCESS. I THINK THAT’S OUR PHILOSOPHY. I THINK EVERYONE, AND I ASSUME BOTH OF YOU, WHEN YOU STORE AS MUCH CUSTOMER DATA AS YOU DO, YOU TAKE SERIOUSLY. >>HOW DO YOU HANDLE IT? ARE YOU TRANSPARENT ABOUT WHAT HAPPENED? ARE YOU TRANSPARENT ABOUT THE IMPLICATIONS? >>YOU TELL CUSTOMERS. >>YOU TELL. I THINK THAT’S WHERE YOU CAN. >>SO WE PROBABLY HAVE A BUNCH OF START UP FOUNDERS OUT HERE. IF YOU’RE ADVISING THEM ON HOW TO PROTECT DATA, WHAT WOULD YOU TELL THEM AS THEY BUILD THE PRODUCT FROM SCRATCH? >>THINK ABOUT IT FROM THE BEGINNING. >>AGAIN, I DON’T THINK THERE’S ANYTHING NEW, BUT I AGREE. SECURITY, PRIVACY. ALL THESE THINGS ARE CRITICALLY IMPORTANT. SO FROM THE VERY BEGINNING, ARCHITECT YOUR SYSTEMS. THING ABOUT HAD A THAT MEANS. THINK ABOUT WHERE IT’S GOING. WHAT PETER SAID, THE MENTALITY AROUND IT. MAKE SURE YOU BRING IN PEOPLE THAT THINK THAT WAY. IT’S ALL ABOUT TRANSPARENCY. >>TEST YOUR HYPOTHESIS. LOOK FOR ANGLES ON IT. >>ANYTHING YOU WOULD ADVISE? >>YOU CAN GET SURPRISINGLY FAR WITH ENCYSTING YOUR BUSINESSES, TO NAME A FEW. >>WE’VE GOT ABOUT TWO MINUTES LEFT. I WANT TO ASK ONE MORE QUESTION OF YOU GUYS. WE’VE ALL DEALT WITH THE CUSTOMER EXPERIENCE. WE ALL CAN TELL HORROR STORIES WHEN THINGS DIDN’T GO WELL. WE’VE HAD ALL THIS DATA, AND IT’S ALL SITTING IN DATABASES, BUT IT DOESN’T DO ANY GOOD IF THE PERSON ON THE GROUND DOESN’T DO ANYTHING WITH IT. HOW DO YOU GET ALL THAT INFORMATION TO THE RIGHT PERSON, SO THAT WHEN THEY’RE DEALING WITH THE CUSTOMER THEY UNDERSTAND HOW TO DO IT CORRECTLY, AND NOT KIND OF BLOW THE WHOLE BRAND? >>THIS IS ACTUALLY THE BIGGEST FAILURE MODE THAT WE SEE WHEN WE COME IN TO SORT OF HELP A COMPANY STAND UP TO GOOD INFRASTRUCTURE. THEY PREVIOUSLY HAD A DATA LAKE PROJECT OF SOME PORT. MAYBE IT’S A DUE CLUSTER, OR WHATEVER, AND ALL THE DATA IS IN THERE. EVERYONE’S THUMBS UP, AND THEN THERE’S THIS MOMENT OF SILENCE, WHERE THEY’RE ALL LIKE, AND THE BUSINESS PEOPLE ARE GOING TO WRITE JAVA QUERIES. THAT’S JUST NOT WHAT HAPPENS. I THINK TO YOUR POINT, OFTEN THE DATA DOES GET INTO ONE OF THESE CLUSTERS. THEN THE QUESTION IS, HOW DO YOU ACTUALLY ACTIVATE IT INTO THESE SYSTEMS. >>I WOULD TAKE A MAYBE EVEN SIMPLER APPROACH. IT’S ABOUT THE CULTURE YOU CREATE. AND WHETHER THE PEOPLE IN YOUR COMPANY THINK THE WAY YOU WANT THEM TO ABOUT HOW IMPORTANT THE CUSTOMER EXPERIENCE IS. THE VALUES IN THE WAY YOU TREAT YOUR EMPLOYEES INFORMS HOW THEY’RE GOING TO TREAT CUSTOMERS. SO WE LOOK AT SOMEBODY LIKE DISNEY. THEY DON’T EVEN CALL THEIR EMPLOYEES, EMPLOYEES. THEY’RE CAST MEMBERS. THE FEELING YOU GIVE THEM, YOU’RE A CAST MEMBER IN A SHOW, IN AN EVENT, IN AN EXPERIENCE, INFORMS HOW THEY ACT, AND REACT. AND THE DATA, PERSONALIZING IT, THAT ONLY MAKES IT BETTER. BUT YOU HAVE TO START WITH WHAT YOUR VALUES ARE. >>SO WE’RE JUST OUT OF TIME, SO WE’RE GOING TO HAVE TO LEAVE IT THERE, I’M AFRAID. LET’S THANK THE PANEL, PLEASE. THANKS, GUYS. >>LADIES AND GENTLEMEN, UP NEXT WE HAVE A SPONSORED INNOVATION BREAK. PLEASE WELCOME TO THE STAGE, MAX WESLE FROM GEORGE SAP, AND YOUR YOU MODERATOR IS GEORGE ALWORTH FROM CLOUD CARE. >>HI EVERYONE. VERY EXCITED TO HAVE A COUPLE OF VERY INTERESTING PANELISTS ON HERE TO TALK ABOUT OVERHYPE TRENDS. GEORGE MATTHEW, WHO IS CEO AND CHAIRMAN OF KESPERY, AN AERIAL TRANSPARENT FOR DRONES, AND MAX WESLE, WHO IS AT SAP. SO GUYS, OVERHYPED TECHNOLOGIES. LET’S JUST START OFF WITH IT. WHAT DO YOU THINK THE OVERHYPED TECHNOLOGIES ARE RIGHT NOW? GEORGE, YOU WANT TO KICK US OFF? >>SURE, I GUESS, MAX, YOU’RE BEING A LITTLE NAUGHTY TO INVITE A DRONE CEO ON STAGE AND TALK ABOUT OVERHYPED TECHNOLOGIES. I THINK WE’RE AT THE POINT WHERE THERE ARE CERTAIN TECHNOLOGIES REACHING SCALE AND ADOPTION. WHEN I WAS IN THE DATA ANALYTICS BUSINESS, AS THE PRESIDENT BEFORE COMING OVER TO KESPERY, IT WAS AMAZING TO SEE HOW MUCH IN PARTICULAR HAD EVOLVED IN THE LAST FIVE YEARS. NOW YOU LOOK AT THE SCALE, WHICH TABLET JUST GOT BOUT OUT BY THE SALES FORCE. YOU’RE SEEING THAT COME TO FULL FRUITION. I THINK WHEN YOU LOOK AT SOME TECHNOLOGIES LIKE EVEN WHERE THE DRONES ARE TODAY. THE BLOOMBERG ARTICLE CAME OUT TO TALK ABOUT HOW MUCH WAS INVESTED IN THE DRONE MARKET, AND WHAT HAS BEEN THE RETURN ON IT. I THINK IN REALITY IN ALL OF THESE CASES, THERE IS THESE MOMENTS EVER MARKETS BEING OVERHYPED. THEY CORRECT ITSELF. WE’RE SEEING THAT RIGHT NOW, INCLUDING BLOCK TRAIN, INCLUDING DRONES. INCLUDING A NUMBER OF AREAS, PARTICULARLY AROUND SYNTHETIC BIOLOGY, BUT ALL OF THOSE WILL COME OUT THE OTHER SIDE, CREATING ENORMOUS AMOUNTS OF VALUE IN MY OPINION. >>MAX. >>WE WERE CHATTING ABOUT THIS EARLIER. AND ONE OF THE THINGS I THINK IS MOST IMPORTANT, IS YOU HAVE TO THINK ABOUT IT IN TERMS OF TIMELINE. OVERHYPED IS A FUNCTION OF WHEN SOMETHING WILL HIT. SOMETIMESWHETHER IT’S GOING TO HIT AT ALL, BUT IN A LOT OF SPACES, I TALKED ABOUT THIS WITH OUR TEAM, INSTEAD OF FOR INSTANCE, QUANTUM COMPUTING. THERE’S A HUGE AMOUNT OF FOUNDATIONAL WORK THAT HAD TO ALLOW YOU TO GO INTO BIG DATA HARNESS LARGE DESPERATE DATA SETS, CLEANSE THEM, MAKE IT USEABLE, SUCH THAT WE CAN HAVE THE AMAZING INNOVATION THAT WE CAN SEE NOW AT THE APPLICATION LAYER. BUT THERE ARE TRENDS THAT WE TALK ABOUT, SORT OF UNIVERSALLY RIGHT NOW, FOR INSTANCE, WITH QUANTUM, THERE’S A WHOLE LOT OF HARDWARE INNOVATION THAT HAS TO HAPPEN. LOW LEVEL TECHNOLOGY INNOVATION HAS TO HAPPEN BEFORE ANY OF THE KIND OF GROUND BREAKING SECURITY APPLICATION SIMULATION WORK THAT IS GOING TO CULL OUT THE OTHER END, AND I THINK IF YOU TAKE THAT LENS, WHAT’S MUCH MORE INTERESTING TO ME IS UNDERSTANDING NOT NECESSARILY WHETHER SOMETHING HAS MERIT IN AND OF ITSELF, EG, BLOCK CHAIN, OR QUANTUM, OR WHATEVER IT MIGHT BE BUT WHAT ARE THE PARTS OF THAT STORY THAT ARMET GOING TO AREN’T GOING TO HIT IN THE NEXT 5 TO 15 YEARS. WHAT ARE THE THINGS THAT PEOPLE ARE RUSHING LIKE LEMMINGS AFTER THAT REQUIRE FOUNDATIONAL INNOVATION TO HAPPEN BEFORE THEY’RE REAL. >>IT SOUNDS LIKE TIMING IS A BIG PART OF IT. I FEEL LIKE A WAY TO DIG INTO THIS MORE IS TO TAKE A HISTORICAL LENS. I GUESS, SPEAKING PERSONALLY, I CAME OF AGE IN TECH DURING THE DOT-COM BOOM, AND THERE WERE A LOT OF VERY SKEPTICAL PEOPLE ABOUT SOME OF THOSE BUSINESSES. AND AT LEAST ON THE BUSINESS SIDE, THAT SKEPTICISM WAS WARRANTED. BUT AT THE SAME TIME, YOU SEE THE SEEDS OF SOME OF THE LARGEST COMPANIES IN TECH BEING SEWN RIGHT THEN, AND A LOT OF THOSE BUSINESSES THAT PEOPLE WERE BEING SKEPTICAL OF BACK THEN, AND PRETTY LARGE BUSINESSES. >>FROM SOME COMPANY THAT SHIPS BUSINESSES AROUND. I THINK THE BEST STORIES SEEM TRANSPARENT WHEN YOU’RE LOOKING BACKWARDS. BUT SOME PEOPLE DO ACTUALLY HAVE A TEN YEAR TESLA MASTER PLAN. WE CAN TALK ABOUT THE LEGITIMACY OF THE NEXT TEN YEARS, BUT I THINK THE TEN YEAR MASTER PLAN WAS PRETTY POWERFUL, AND I THINK AMAZON WITH WHAT THEY’VE DONE WITH DISTRIBUTION INFRASTRUCTURE, AND HOW THEY’VE BUILT SOMETHING KIND OF GREENFIELD FOR THE NEXT GENERATION IS REALLY IMPORTANT. WHAT I SEE FROM THOSE EXAMPLES OF WHAT WORKED, AND WHAT DIDN’T WORK WAS IN COMPANIES THAT APPRECIATED WHAT EXISTED, AND WHAT NEEDED TO EXIST BEFORE THEY COULD TAKE THE SECOND AND THIRD STEPS, RIGHT, I HAD TO PROVE THAT I COULD SELL AN ELECTRIC CAR TO A HIGH END MARKET, AND THAT I COULD GET IT PAST A CERTAIN DISTANCE THRESHOLD BEFORE I COULD MASS PRODUCE THE THING. I HAD TO. I MEAN, IT’S RUNNING A MISSION TO THE MOON. YOU DON’T SEND YOUR FIRST ROCKET UP IN A MANNED MISSION WITH THE INTENTION OF LANDING SOMEBODY ON A LUNAR FACE. YOU DO STAGED TESTING. >>LADDER UP TO THE MOON. >>THAT’S RIGHT. >>YOU MENTIONED E-COMMERCE, SO I HAPPENED TO HAVE STARTED MY CAREER IN ORIGINALLY E-COMMERCE IN THE MID-90S. SO I WAS PART OF A COMPANY BACK IN THOSE DAYS CALLED FOUR COURT PARTNERS. WE HAD ACTUALLY BUILT SOME OF THE LARGEST SCALE E-COMMERCE SYSTEMS ALL THE WAY THROUGH THE DOT-COM BOOM AND BUST. SO BEST BUY, NIKE, MARTHA STEWART, THESE WE BUILT FROM BRICK AND MORTAR SITE. BACK THENTHERE WAS NO APPLICATION SERVICE OUT THERE. THE A DIDN’T EXIST. NOW YOU SEE THIS COMPLETE PASSIVE SOLUTION, WITH SHOPPERS OUT IN THE MARKET. WE HAD TO PIVOT WHEN THE DOT- COM BUST OCCURRED, AND WE BUILT A LANDING PAGE TESTING AUTOMATION SYSTEM. AGAIN, OVERMATICA GOT BOUGHT BY ADOBE. THAT’S STILL LANDING PAGE TESTING TARGETING INSIDE OF THE ADOBE SUITE. IT TURNS OUT, IT’S JUST A QUESTION OF TIMING. BECAUSE THE STUFF THAT WE HAD BUILT BACK THEN WENT ON TO BUILD A MASSIVE COMPANY OUT OF, NOT MORE THAN THREE OR FOUR YEARS LATER. I THINK THIS CONCEPT OF BOTH TIMING AND FUNDAMENTAL INFRASTRUCTURE AND WHEN IT COMES ABOUT IS REALLY IMPORTANT WHEN IT COMES TO THINKING ABOUT WHEN YOU CAN CATCH THE WAVE. IF THE TIMING IS OFF YOU’RE GOING TO MISS IT, OR JUST BE TOO EARLY. >>YOU BRING UP ANOTHER POINT IN THAT. IN THE LATE 90s. WE HAD 270 MILLION PEOPLE CONNECT BID A LOW BANDWIDTH VIA THE INTERNET. AND NOW WE HAVE 4.7 BILLION PRIMARILY WITH HIGH BANDWIDTH. EVEN THE LOW BANDWIDTH MOBILE CONNECTIONS WE HAVE TODAY ARE HIGH BAND WIDTH COMPARED TO WHAT WE USED TO GET ON THE INTERNET. YOU COULDN’T IMAGINE BUILDING A SHOPIFY FOR THE 270 MILLION PEOPLE, FOR WHICH THERE WERE 10 MILLION SHOPPERS FOR ALL PRODUCTS GLOBALLY. BUT YOU DO THAT EN MASSE TODAY. THIS IS WHERE, WHEN I SPEND TIME LOOKING AT THE TRENDS AND THE TECHNOLOGY CHANGES THAT MAY OR MAY NOT IMPACT SAP SPECIFICALLY, WHAT WE’RE FOCUSED ON IN A BIG WAY IS UNDERSTANDING IS THE TECHNOLOGY GOING TO WORK AT ALL? YES, OR IS IT, NOW HE, FAIRY DUST. DOES IT WORK NOW, OR CAN THE MARKET SUPPORT IT TODAY? ALL OF THESE THINGS ACTUALLY MATTER WHEN YOU’RE TRYING TO MAKE A BET, AND FOR THE FOLKS HERE, WHO ARE START UP FOUNDERS, THINKING ABOUT PUTTING BLOOD, SWEAT, AND TEARS, AND YEARS IN SOMETHING, YOU REALLY HAVE TO CONSIDER NOT JUST AS THIS, IS WHAT I’M WORKING ON INSPIRATIONAL, AND TRANSFORMATIVE, BUT IS IT GOING TO BE ABLE TO SUSTAIN ITSELF AND ITS IMPACT? >>OKAY, RUBBER HITS THE ROAD. LET’S DOUBLE CLICK ON THIS. WE HAVE QUESTIONS OF TIMING. WE HAVE QUESTIONS OF FOUNDATIONAL PIECES. YOU’RE AN OPERATOR, YOU’RE AN ENTREPRENEUR, YOU’RE AN INVESTOR. HOW DO YOU KNOW WHEN IS THE RIGHT TIME OR WHAT IS THE RIGHT APPROACH? WHAT DO YOU GUYS THINK OF THAT 1234. >>I HAVE A SIMPLE WAY OF STARTING TO PHRASE THAT NOW. I THINK THE TECHNOLOGIES DO INCREDIBLY WELL, AND CREATE A DISPROPORTIONATE AMOUNT OF OUTCOME. IF YOU LOOK AT SOME OF THE SITUATIONS WHERE YOU TRY TO GO RACE AHEAD, AND GO ADOPT TECHNOLOGY THAT ISN’T QUITE READY YET, TRY TO GO AFTER A MARKET THAT ISN’T QUITE THERE YET, AND YOU TRY TO BUILD A COMPANY FOR THE LONG TERM, YOU YOU MIGHT EVENTUALLY GET THERE, BUT IT IS GOING TO BE A JOURNEY AND A HALF, RIGHT? IT’S INTERESTING FOR ME PERSONALLY, BECAUSE WHEN I JOINED ALTREX FROM SAP IN 2011, IT WAS A PRETTY INTERESTING MOMENT, BECAUSE WE HAD ACTUALLY ACQUIRED BUSINESS OBJECTS. I WAS PART OF THE TEAM THAT ACQUIRED BUSINESS OBJECTS. I ENDED UP RUNNING A BIG CHUNK OF THE BUSINESS OBJECTS BI BUSINESS. WE SAW THIS MASSIVE SCALE AROUND THE BUSINESS INTELLIGENCE TOOLING IN THAT MARKET, AT THAT MOMENT. BUT THIS LITTLE TINY COMPANY CAME ALONG CALLED TABLOW. THEY WERE DOING SOMETHING THAT NO ONE SAW IN THE BUSINESS ANALYTICS SPACE PRIOR. THERE WAS A FUNDAMENTAL DISRUPTIVE MOMENT, AND I JUST HAPPENED TO THINK ABOUT THAT MOMENT AT THAT TIME, AND SAID WHAT’S HAPPENING TO FOLLOW THAT DISRUPTIVE MOMENT, WHILE THE DATA PREP, AND THE MODELING NEEDS TO ALSO FOLLOW THOSE USERS, AND LITERALLY, THAT WAS THE THESIS OF INITIAL SAP INVESTING. WHEN WE LOOK AT THOSE MOMENTS, IT ALWAYS HAS TO BE ABOUT, LIKE, YES, THE JOURNEY IS HARD. IT WAS ALWAYS GOING TO BE HARD NO MATTER WHAT START UP, NO MATTER WHAT MID-STAGE, NO MATTER WHAT LATE STAGE COMPANY YOU’RE INVOLVED WITH. THE JOURNEY IS ALWAYS GOING TO BE HARD. BUT HAVE YOU AT LEAST FIGURED OUT SOME STRUCTURE OF TAIL WIND TO SUPPORT YOU, TO MAKE IT THROUGH THE JOURNEY? >>I WOULD INTERPRET THAT AS NOTHING IS NEW. WE DO THIS. WE HAVE MANY, MANY OF THE SAME ITCHES OVER AND OVER AGAIN. YOU CAN SEE IT IN TECHNOLOGY, YOU CAN LOOK AT THE HISTORY OF HOW DIFFERENT MARKETS EVOLVED, AND WHAT WAS IT WE NEEDED TO SOLVE FOR DATA GOVERNANCE IN THE LEGACY AI WORLD THAT WE’RE SOLVING NOW, BUT YOU SEE IT AGAIN IN INDUSTRY AFTER INDUSTRY. YOU THINK ABOUT WHAT INSTACART’S DOING NOW. TRADE PROMOTIONS IS WELL UNDERSTOOD IN THE GROCERY INDUSTRY. BUT INSTACART CAN CREATE MEANINGFUL BUSINESS THAT WEB MAN WAS NOT ABLE TO DO, BECAUSE THEY FIGURE OUT THEY’RE GOING TO ADVERTISE ON THE EYE BALLS, ON THE TPM SIDE. NOT THE DELIVERY SIDE OF IT. IT’S JUST UNDERSTANDING WHAT WAS BEING SOLD FOR IN THE LAST PARADIGM, AND WHAT WILL HAVE TO BE SOLVED FOR TO SUSTAIN IT MOVING FORWARD. THAT MEANS EVERYBODY BUILDING A COMPANY HAS TO BE HISTORIAN. >>LET ME GIVE ANOTHER REALLY FUN EXAMPLE RIGHT NOW, TO CHIME OFF OF WHAT MAX SAID. WHEN WE LOOK AT THIS PRODUCT AROUND RPA, ROBOTICS PROCESSING AUTOMATION, THERE’S BEEN THIS FOREVER AND A DAY. IT’S BEEN OUT THERE, AND FRANKLY, SOME OF THE RPA TECHNOLOGIES, IN TERMS OF OPTICAL CHARACTER RECOGNITION, THOSE WERE ALSO OUT THERE. BUT WHY DOES IT MATTER NOW? IT TURNS OUT A LOT OF BPO COMPANIES GOT VERY, VERY FAT AND HAPPY, AND THEY WERE CHARGING INSANE AMOUNTS OF DOLLARS, AND THE RPA’S SAID CAN WE PROVIDE SOFTWARE FOR YOU TO DO $100 MILLION OF BPA FOR $10.000000? AND FUNDAMENTALLY DISRUPTED EVERY OFFER OUT THERE WITH SOFTWARE. >>SO THIS IS AN INTERESTING TANGENT, BECAUSE YOU ALSO HAVE THIS TREND, WHERE IN THE VALLEY, WE BECAME OBSESSED WITH APPLYING DEEP LEARNING TO MANY OF THESE PROBLEMS. YOU LOOKED AT ENTERPRISE SOFTWARE, AND YOU HAD EVERY COMPANY. EVERY NEW COMPANY WAS AI, AND ML APPLIED TO THIS. I BELIEVE THEY’RE INTERESTING TECHNOLOGIES IN DIFFERENCE RPA SOLUTIONS, BUT THE REALITY IS, THIS IS NOT THE MOST ADVANCED THING IN THE WORLD. IT’S UNDERSTANDING THE PROBLEM THAT YOU’RE SOLVING, AND APPLYING TECHNOLOGY THAT MAKES SENSE TO THAT. THIS AGAIN IN OUR PURSUIT OF OVERHYPED TECHNOLOGIES, YOU CAN BECOME IN LOVE WITH THE STORY OF THE TECHNOLOGY, AND NOT NECESSARILY FOCUSED ON THE PROBLEM ANYMORE. >>INTERESTING. I LIKE THAT FRAMING. BUT I ACTUALLY WANT TO TAKE THIS ON A SLIGHTLY DIFFERENT TACT FOR A MOMENT. YOU CAN GET OVERHYPED TECHNOLOGIES, BECAUSE THE TIMING IS WRONG. YOU CAN GET OVERHYPED TECHNOLOGIES, BECAUSE THE FUNDAMENTAL PIECES AREN’T IN PLACE. WITH YOU YOU CAN GET OVERHYPED TECHNOLOGIES, BECAUSE THIS THING IS A DOG, IN ONE FORM OR ANOTHER. I NEED TO PICK ON SOMETHING TO BRING THIS TO LIFE. BUT I REMEMBER BACK TEN YEARS AGO, SECOND LIFE WAS THIS BIG THING, AND YOU HAD ALL OF THESE COMPANIES INVESTING IN IT, AND CREATING ISLANDS OVER WHATEVER. IT OBVIOUSLY WENT NOWHERE. IS THERE LIKE THOUGHTS ON HOW TO, IT’S ONE THING TO GET THE TIMING OFF, BUT THOUGHTS ON HOW TO AVOID GOING INTO ONE OF THESE THINGS THAT’S JUST A BLACK HOLE? >>WELL, I WILL PUSH BACK ON YOUR SECOND LIFE ANALOGY, BECAUSE I THINK THAT — >>I’M GOING TO PUSH BACK TOO. >>I FEEL LIKE MMO’S ARE A THING. SO IT’S POSSIBLE FOR A PLAY ON A MARKET TO BE WRONG, AND STILL THE MARKET AND OVERALL TREND TO BE RIGHT. TO YOUR POINT, THERE ARE PLENTY OF TECHNOLOGIES THAT REALLY, YOU KNOW, YOU SAW THE HYPE HAPPEN, AND IT DIDN’T GO WHERE YOU EXPECTED. I’LL SAY OPENLY, YOU KNOW WHAT WAS IT? FOUR, FIVE YEARS AGO, EVERYBODY, IF WE HAD THIS CONFERENCE FOUR OR FIVE YEARS AGO, EVERYBODY WOULD BE TALKING ABOUT IOT. NOT IOT NECESSARILY THE WAY YOU MIGHT BE LOOKING AT IT NOW, WHICH IS STANDARD CENTER, STANDARD DEPLOYMENT, BUT EVERYBODY WAS TALKING ABOUT THESE NEW CENTERS THAT WERE COMING OUT, AND HOW THINGS WERE GOING TO GET INTO DIFFERENT USE CASES. NO ONE LOOKED AT WHAT THE INFRASTRUCTURE WAS IN PLACE, AND HOW YOU’RE GOING TO DEPLOY THESE THINGS. YOU LOOK NOW FIVE YEARS LATER, AND YOU HAVE A HEAVY SERVICES PLAY. SO THERE ARE LOTS OF PEOPLE WHO HAVE APPLIED TECHNOLOGY TO AUTOMATE BUSINESS PROCESS, IN OIL FIELDS, WHEREVER IT MIGHT BE. BUT A LOT OF THE COMPANIES THAT WERE OUT THERE, SHIPPING, LIKE OUT OF THE BOX, IOT PLATFORMS, IT WAS SOMETHING THAT MAY HAVE WORKED IN A LAB, BUT IF YOU LOOKED ANYWHERE ELSE IN THE WORLD, IT WAS CLEAR THAT IT WASN’T GOING TO WORK THE WAY IT WAS BEING DESCRIBED. >>SO GIVE ME AN EXAMPLE OF THIS. WITHOUT NAMING THE SUPER MAJOR THAT KASPERY HAPPENS TO BE WORKING NOW. THE IMAGING TECHNOLOGY IS ACTUALLY BEING APPLIED TO AN UNDERSEA ROBOTIC ROVER THAT’S COLLECTING 9 TERABYTES OF UNDERSEA PIPELINE FOOTAGE, WHERE WE’RE NOW PROCESSING WHERE ARE THE FISHING NETS, WHERE ARE THE ROCKS, WHERE ARE THE MOTION DEVIANCES, WHERE IS THE SAND? WHERE IS THE CORROSION DETECTION. THE CORROSION DETECTION MODULE IS AN ML MODEL THAT THE SUPERMAJOR BUILT, AND THEY’RE DEEMPLOYEING ON THE CASPERY CLOUD AND STRUCTURE. NOTICE IN THAT ENTIRE DISCUSSION, I NEVER MENTIONED THE WORD DRONE. IT TURNS OUT THE SAME INGREDIENTS, THE SAME TECHNOLOGY THAT STARTED KASPERY IS NOW BEING APPLIED FROM THE SCALED DOWN VIDEO IMAGERY PROCESSING. SO I THINK, IN MANY OF THESE CASES, WE GET UPSET WHEN THE TECHNOLOGY ISN’T QUITE THERE AT THAT MOMENT, AND JUST KILLED IT. SECOND LIFE BEING A GREAT EXAMPLE. GUESS WHAT? SECOND LIFE GENERATED AN ENTIRE GENERATION OF MMO’S. MY DAUGHTER PLAYS FORTNITE EVERY DAY. IT IS FOR COMPANIES LIKE SECOND LIFE EXISTING IN THE FIRST PLACE THAT THAT IS EVEN POSSIBLE. THAT IS SOMETHING WE ALWAYS FORGET. IT’S LIKE, PRETTY IMPRESSIVE HOW MUCH WE END UP COMPLETELY S RIGHT? AND THAT HAPPENS OVER AND OVER AGAIN. >>WE ARE GETTING CLOSE ON TIME BUT I FEEL THAT’S A NICE SEGUE INTO LOOKING INTO THE FUTURE. THE TECHNOLOGIES RIGHT NOW THAT YOU THINK THAT ARE AT RISK OF BEING OVERHYPED LOOKING OUT 10 YEARS? >>THIS IS GOING TO BE AN ANTI. >>MIDDLEWARE AND APPLICATION DEVELOPMENT PLATFORMS WILL SEE A RESURGENCE YOU HAVEN’T SEEN IN A LONG TIME. THE ABILITY TO CONNECT. WHETHER IT’S USING AN INTEGRATION PLATFORM AS A SERVICE. USING SOMETHING AS SIMPLE AT. THE ABOUT FOR US IN 10 YEARS TO BE ABLE TO CREATE SOMEWHAT COMPLEX APPLICATIONS. TODAY I CAN BARELY GET MY E- MAIL DEPOSITING A FILE IN ONE TRY. I THINK 10 YEARS FROM NOW THAT’S REALLY GOING TO BE THERE. AND YOU’LL SEE THE ENTERPRISE LANDSCAPE CHANGE PRETTY DRAMATICALLY BECAUSE OF IT. >>I’M GOING OUTSIDE THE ENTERPRISE WORLD. I HAPPEN TO HAVE HAD AN UNDERGRADUATE DEGREE IN, SO IT’S FUNNY TO SEE, COME BACK TOGETHER AGAIN 25 YEARS LATER. WHEN I GRADUATED THAT WAS A USELESS DEGREE. BUT TOO LATE TO GO INTO ANYTHING RELATED TO TECHNOLOGY. AND TO SEE SYNTHETIC BIOLOGY AND THE MOVEMENT AROUND CRISPER. TWO WEEKS AGO, THEY’VE, EDIT A NUMBER OF GENES SIMULTANEOUSLY. WE ARE AT THAT MOMENT WHERE YOU CAN NOW SEE ALL KINDS OF OPPORTUNITIES FOR BOTH JUST EXPRESSIVE GENE INTERPRETATION OF WHAT YOU CAN REDUCE AS FAR AS THE AMOUNT OF IMPERFECTIONS THAT HAPPEN IN THE GENOME AS WELL AS THE POSSIBILITY FOR ALL KINDS OF SYNTHETIC BIOLOGY OPPORTUNITIES AND THAT’S HAPPENING IN THE NEXT 10 YEARS. >>SUPER COOL. I THINK WE’RE DONE OUR PART TO ADD A LITTLE BIT OF HYPE TO OUR ON A PANEL ABOUT OVERHYPED TECHNOLOGY. >>NOTICE WE MANAGED TO GET THROUGH THE PANEL WITHOUT TALKING ABOUT SPECIFIC THINGS. >>THANK YOU VERY MUCH. THIS HAS BEEN GREAT. >>THANK YOU, ALL. WE ARE VERY THRILLED TO BE INTRODUCING AN TRUE, LEADING RESEARCHER AND SCIENTIST IN AI WHO YOU MAY KNOW LEFT A COUPLE OF YEARS AGO AND STARTED A NUMBER OF AI PROJECTS WITH THE INTENTION OF MAKING AI MORE APPROACHABLE. TALKING WITH HIM IS OUR REPORTER, LUKAS MANNY, THANK YOU. >>>HELLO, EVERYBODY. >>NICE TO SEE ALL OF YOU. >>ALL RIGHT. THANK YOU SO MUCH FOR JOINING US. YOU SEEM LIKE AN AWFULLY BUSY GUY. THERE ARE A FEW ORGANIZATIONS, A FEW COURSES, A FEW START-UPS THAT ALL KIND OF HAVE YOUR NAME WITH THEM. I’M CURIOUS STARTING THINGS OFF. WHERE ARE YOU MOST OPERATIONALLY INVOLVED? WHAT DOES YOUR DAY-TO-DAY LOOK LIKE? >>THE RISE OF AI MEANS A LOT OF THINGS WE NEED TO DO TO REACH THE FULL POTENTIAL. THESE DAYS I’M SPENDING MOST OF MY TIME AT THREE ORGANIZATIONS. IF YOU COME FROM A LARGE COMPANY AND YOU WANT HELP ON AI. THAT’S WHAT LANDING AI DOES. AI FUNDS CREATES NEW START-UPS FROM SCRATCH. VALIDATION, HIRING THE INITIAL TEAM, AND THEN DEEP LEARNING AI IS OUR EDUCATIONAL ARM. SO A LOT OF INDIVIDUALS IF YOU WANT TO LEARN ABOUT AI, LEARN THE TECHNIQUES OF DEEP LEARNING, AND IF YOU WANT TO UNDERSTAND WHAT AI IS AND HOW IT MAY AFFECT YOUR BUSINESS. OFTEN WORKING OF COURSE IN ORDER TO TEACH PEOPLE ABOUT AI. I HOPE THAT WITH THESE THREE TEAMS, WE COULD BUILD MANY PIECES OF THE ECOSYSTEM WE NEED TO HELP AI REACH ITS FULL POTENTIAL. >>OF THESE 3 ORGS WHEN YOU WAKE UP. WHICH OF THE ORGANIZATION HAS THE LONGEST LIST DAY AFTER DAY DO YOU FEEL LIKE? >>I’M SPENDING MOST OF MY TIME LANDING AI RIGHT NOW WHICH IS ONE OF THE PORTFOLIO COMPANIES. BUT ONE OF THE THINGS I’M EXCITED ABOUT IS YOU KNOW MY BACKGROUND. LONG AGO, GOOGLE BRAIN TEAM WHICH HELPED GOOGLE BECOME VERY GOOD AT AI AND BUILD AI GROUP WHICH HELPED BECOME CHINA’S GREATEST AI COMPANY. IF YOU LOOK AT WHAT THE, TRANSFORMED SOFTWARE. COMPANIES LIKE GOOGLE AND MANY OTHERS, FACEBOOK, MICROSOFT, AND OTHER SOFTWARE COMPANIES, I THINK THE NEXT PHASE OF AI IS TO TRANSFORM ALL OF THE OTHER INDUSTRIES AS WELL. EVERYTHING FROM MANUFACTURING TO AGRICULTURE TO RETAIL TO HEALTHCARE AND SO THAT’S WHAT LANDING AI HOPES TO DO. >>SO YOU LEFT BYE DUE. >>IT’S ALL BEEN UP AND TO THE RIGHT. IF YOU LOOK AT THE MOST RECENT AI INDEX, GREAT REPORT, I THINK THE NUMBER OF JOBS IN DEEP LEARNING INCREASED 35 FOLD OVER A TWO-YEAR PERIOD. AND THIS IS A REFLECTION OF COMPANIES WANTING TO HIRE MORE PEOPLE IN AI AND DEEP LEARNING, AND WE SEE THIS WITH THE DEEP LEARNING COURSES WE OFFER. IF YOU LOOK AT A MORE QUESTIONABLE METRICS. THE NUMBER OF MENTIONS OF AI BY CEOs ON EARNINGS CALLS AND THE CHART KIND OF LOOKS LIKE THAT AND I HAVE NO IDEA IF THE NUMBER OF TIMES CEOs MENTION AI ON EARNINGS CALLS IS INDICATIVE OF ANYTHING. >>COULD BE A NEGATIVE TREND. BUZZ WORDS OUT THERE. >>BUT I THINK MAYBE THE ONE THING IT INDICATES IS THE RISE IN ENTERPRISE DEMAND FOR THE AI SERVICES. >>YOU MENTIONED A FEW INDUSTRIES THAT LANDING AI WAS FOCUSED ON. WHY IS MANUFACTURING AN EARLY FOCUS? >>WE STARTED IN MANUFACTURING, AND FOR EXAMPLE, WE DO A LOT OF WORK IN VISUAL INSPECTION. RATHER THAN USING HUMAN EYES TO CHECK IF A COMPRESSED CANISTER HAS A LEAK YOU CAN DO THAT AT GREATER RELIABILITY. AND THIS IS HELPING FACTORIES INSPECT MANY THINGS. SCRATCHES, LEAKS, AND IMPROVE QUALITY. BEYOND MANUFACTURING, DOING A LOT OF WORK ALSO IN AGRICULTURE AND HEALTHCARE. AND THAT’S ONE EXAMPLE. DOING A LOT OF WORK WITH AGRICULTURE MACHINERY COMPANY TO TAKE TRADITIONAL AGRICULTURE MACHINES THAT WERE NOT VERY SMART AGRICULTURE MACHINES TO TRY TO PUT SENSORS ON THEM AND TO OPTIMIZE HOW THEY PERFORM USING MACHINE LEARNING. AND THIS IS WHAT WE’RE WORKING ON. SAME FARMER, SAME FIELD, AND PUT IN A SMARTER MACHINE, CAN OPTIMIZE THE PLANTING AND OF THE SAME FARM. I THINK THIS CAN HELP DRIVE THE PRODUCTIVITY. HELP THEM GET A BETTER LIVING AND OPTIMIZE THE ENVIRONMENTAL EFFECTS OF HOW WE PRODUCE AGRICULTURE. >>THERE ARE OBVIOUSLY A LOT OF COMPANIES THAT HAVE BEEN GETTING STARTED. WHY DID YOU SEE THE SPACE AND FEEL YOU NEEDED TO COFOUND ONE YOURSELF? >>YOU KNOW, AI, ONE OF THE THINGS ABOUT AI IS I DON’T THINK OF AI AS. CANNOT BE IMPLEMENTED AS A SERVICE WHERE YOU SWIPE YOUR CREDIT CARD AND YOUR COMPANY IS NOW AI ENABLED. ONE OF THE BIGGEST MISUNDERSTANDING FOR A LOT OF CEOs IS THAT THE IMPACT OF AI ON MANY INDUSTRIES IS STRATEGIC RATHER THAN TACTICAL. THERE ARE A LOT OF CEOs WHO THOUGHT THE INTERNET WAS A BIG THING. FIVE YEARS OR 10 YEARS AGO. AND HEY, I GOT A WEBSITE, I GOT THIS INTERNET THING COVERED AND THAT WAS NOT TRUE. IF YOU LOOK AT COMPANIES THAT LEARN TO USE THE INTERNET PROPERLY. UPS AND FEDEX. THEY RE-ARCHITECT A LOT OF DATA FLOW USING THE INTERNET AND THIS IS FUNDAMENTAL TO THE WAY THEY DO BUSINESS. AND MICROSOFT AND APPLE WERE NOT INTERNET COMPANIES. THEY MADE TONS OF MONEY BEFORE THERE WAS A MODERN INTERNET. BUT THEY TRANSFORMED TO INTERNET COMPANIES. THE INTERNET HAS A STRATEGIC IMPACT ON THESE COMPANIES, RANGING FROM THINGS LIKE FEDEX, UPS, APPLE, MICROSOFT. AND I THINK AI WILL ALSO HAVE THIS TYPE OF STRATEGIC IMPACT ON MANY INDUSTRIES AND WHAT I MEAN IS THAT THE WAY YOU COMPETE AND CREATE VALUE IN THE FUTURE WILL BE DIFFERENT THAN IT IS TODAY. LOOK AT WHAT UBER DID TO THE TAXI INDUSTRY. THE INTERNET ENABLED THAT. WHAT HAPPENED WAS THE INTERNET AND MOBILE RE-ARCHITECTED THE NATURE OF THE INDUSTRY, HOW YOU CREATE VALUE. AND I’M SEEING EARLY PHASES OF THAT WITH AI COMING IN TO HAVE A STRATEGIC IMPACT. COMPANIES THAT EMBRACE IT AND HAVE A CORRECT VISION OF THE FUTURE AND BUILT THE PIECES THEY NEED WILL SURVIVE OR THRIVE AND COMPANIES THAT THINK ALL I NEED IS I NEED TO BUILD A WEBSITE AND NOW MAYBE MY WEBSITE NEEDS A PLUG-IN. MANY OF THOSE COMPANIES WILL PERISH. I’M STARTING TO SEE MORE CEOs GET SMART ABOUT THAT. BUT HOW WE ARE RE-ARCHITECTING DIFFERENT INDUSTRIES IS BEING SORTED OUT. AND I HAVE A CLEARER VIEW OF SOME INDUSTRIES THAN OTHERS. >>IF YOU’RE NOT A TECH TITAN BUT A MEDIUM TO LARGE SIZE ENTERPRISE, IS IT WORTH BUILDING OUT AN AI ENGINEERING TEAM OR SHOULD YOU BE USING A START-UP SERVICE. >>I THINK EVERY LARGE ENTERPRISE HAS RESOURCES AND MUST SPEND THE RESOURCES TO FIGURE OUT AI FROM A STRATEGIC AND A TACTICAL POINT OF VIEW. FOR THE MEDIUM SIZED COMPANIES, IT IS A BIT HARDER. BUT I THINK THAT’S TO THE EXTENT THAT AI COULD HAVE A TRANSFORMATIVE IMPACT ON HOW YOUR INDUSTRY IS STRUCTURED. I THINKS THE INCUMBENT EVEN FOR MANY MEDIUM SIZED. AND I’M NOT SURE WHAT MEDIUM SIZED. IF YOU’RE A BILLION DOLLARS AND UP YOU BETTER FIGURE THIS OUT. THEY TOLD ME THEY WERE GETTING, IT MIGHT HAVE BEEN OVERKILL. THEY WERE GETTING EVERY SINGLE ONE OF THE 2,000 EMPLOYEES TO TAKE AI FOR EVERYONE. BECAUSE THEY WANTED EVERY ONE OF THE 2,000 PLEAS, ENGINEERS, PRODUCT MANAGERS, RECEPTIONISTS, MARKET RECRUITER TO KNOW ENOUGH AI. MAYBE NOT EVERY COMPANY NEEDS TO DO THIS. BUT I THOUGHT THIS WILL MAKE THIS COMPANY INCREDIBLY THOUGHTFUL ABOUT THE FUTURE. >>INTERESTING. I THINK THERE HAVE BEEN A NUMBER OF TRENDS RECENTLY, SEEMS LIKE SOME OF THE AI START- UPS ARE RELYING ON HUMAN LABOR TO TRAIN. DO YOU THINK THIS IS A TREND THAT’S GOING TO CONTINUE FOR THE NEXT FEW YEARS EMPLOYING THOUSANDS OF PEOPLE. IS THIS A CAREER FOR A WHILE? >>UNTIL YOU’VE BEEN ON THE INSIDE OF AN AI TEAM IT’S HARD TO UNDERSTAND HOW INSATIABLE OUR ALGORITHMS ARE FOR DATA. I THINK THE NEED FOR MASSIVE NUMBERS OF LABORERS WILL CONTINUE AND GROW FOR THE FORESEEABLE FUTURE AS AI CONTINUES TO AFFECT INDUSTRIES WHERE THERE ISN’T AS MUCH DATA. ONE EXAMPLE, THE SOFTWARE, HOW TO MANAGE CODE. SO WE HAVE REALLY CLEVER IDEAS LIKE VERSION CONTROL. AND IT TOOK US A LONG TIME TO EVOLVE. AND WE HAVE A LOT OF SOFTWARE ENGINEERING PROCESSES LIKE CODE REVIEWS. AND STRUM AND AGILE. AND I THINK THE PROCESSES FOR MANAGING DATA ARE MUCH LESS MATURE. SO HOW DO YOU SHARE DATA? HOW DO YOU MANAGE? WHAT DO YOU. ONE OF THE THINGS THAT YOU NEVER DO IN ACADEMIA BUT ON PRACTICAL PROJECTS, YOU, PUBLISH A PAPER AND DON’T MESS WITH IT. WE FIND ALL THE TIME THAT SOMETIMES, EDIT IS TEST SET. HOW DO YOU DEAL WITH THE DATA AND THE SYSTEMATIC PROCESSES FOR EDITING THE TEST SET? THE MAJORITY OF OUR TOOLS FOR MANAGING DATA IS MUCH LOWER THAN, FOR MANAGING AND EDITING A CODE. SO I THINK THAT’S ANOTHER IMPORTANT DIRECTION THAT I THINK WE’LL GO IN. >>WHERE DO YOU FEEL THE NEXT DEEP LEARNING BREAKTHROUGH IS GOING TO HAPPEN? >>CLOSELY RELATED TO DATA, ONE SUBSET IS ON THE RISE IS SMALL DATA. OFTENTIMES, LOW DATA. BUT A LOT OF DEEP LEARNING WAS DRIVEN BY THE SOFTWARE CONSUMER INTERNET COMPANIES, COMPANIES LIKE GOOGLE. FACEBOOK, AND A FEW OTHERS, AND CONSUMER INTERNET COMPANIES HAVE TONS OF DATA. HUNDREDS OF MILLIONS OR BILLIONS OF USERS, AND THEY GENERATE A LOT OF DATA. THE CURRENT WAVE OF DEEP LEARNING, A LOT OF ALGORITHMS ARE DESIGNED FOR MASSIVE AMOUNTS OF DATA. WE COULD COLLECT DATA FROM A DOZEN FARMS EASILY, BUT THERE ARE NOT 100 MILLION FARMS WE COULD GO TO TO COLLECT DATA FROM. WHAT IS THE LEARNING ALGORITHM EVEN IF YOU HAVE A DOZEN OR 20 FARMS OR MANUFACTURING IF YOU ARE TRYING TO TELL A SMARTPHONE HAS A SCRATCH. YOU DO NOT HAVE A MILLION PICTURES OF SCRATCHED SMARTPHONES, NO FACTORY HAS MANUFACTURED A MILLION SCRATCHED SMARTPHONES? CAN YOU GET YOUR ALLEGHENY RIGHTED MS TO WORK WITH ONLY 10 PICTURES? >>THINGS LIKE TRANSFER LEARNS, ONE SHOT LEARNING, DATA GENERATION. I’M SEEING EXCITING PROGRESS ON THIS AND ONE OF THE THINGS THAT MY TEAMS AT LANDING AI HAVE DONE, THINKING OF SMALL DATA BECAUSE THE ABILITY TO GET A DEEP LEARNING ALGORITHM TO WORK WITH 10 TRAINING EXAMPLES, THAT ALLOWS US TO BREAK INTO A LOT OF INDUSTRIES WHERE YOU DON’T HAVE A MILLION OR 100 MILLION DATA POINTS. >>ARE YOU GOING TO HAVE TO RELY ON HUMAN CONTRACTORS PARSING THROUGH SOME OF THAT STUFF WHEN YOU HAVE LESS TRAINING DATA? >>LET’S SEE. WE DO SOME LABELING OURSELF. SOME CONTRACTORS AND SOME. AND I THINK WE DO A LOT OF THINGS THAT AND I THINK ONE EXAMPLE WE DO A FAIR AMOUNT OF TRANSFER LEARNING. LEARN REPRESENTATIONS AND TRANSFER IT. BUT OFTEN IT’S THE DETAILS OF THE ALGORITHMS THAT MAKE A HUGE DIFFERENCE IN THE FINAL PERFORMANCE. >>SO SWITCHING GEARS PRETTY HEAVILY HERE, YOU WORKED AT GOOGLE IN THE U.S. AND BUY DUE IN CHINA. AND I’M CURIOUS ON YOUR THOUGHTS BETWEEN THE AI RACE BETWEEN THE TWO COUNTRIES AND WHAT ADVANTAGES CHINA MIGHT HAVE. >>WHY ARE YOU ASKING ABOUT CHINA ADVANTAGES AND NOT AMERICAN ADVANTAGES? >>WE’LL GET THERE SOON? >>THE AI RACE IS A MISNOMER. MUCH AS THE RICE OF ELECTRICITY BENEFITED ALL NATIONS AND I THINK TODAY I’M VERY HAPPY THAT SINGAPORE HAS A GREAT ELECTRIC GRID AND THE FACT THAT PEOPLE IN SINGAPORE CAN KEEP THE LIGHTS ON ALL THE TIME, IT DOESN’T MAKE US IN THE U.S. ANY WORSE OFF. AND MAYBE WE CAN LEARN FROM HOW THEY RUN OUR ELECTRIC GRID. I FEEL PRIVILEGED TO LEARN FROM MANY COMMUNITIES AROUND THE WORLD. I MEAN THAT VERY SINCERELY. I THINK AMERICA STILL HAS AN EDGE IN BASIC RESEARCH. BUT I WOULD SAY TO PEOPLE OF BOTH NATIONS, PEOPLE OF ALL NATIONS, I THINK WE’RE AT A POINT WHERE ALL NATIONS SHOULD LEARN FROM ALL NATIONS. FUN FACT. TWEETED OUT SEVERAL WEEKS AGO THAT WE’RE NOW AT 100 ARCHIVED PAPERS PER DAY ON AI. AND THIS VOLUME OF RESEARCH IS NOT GENERATED BY ONE COMMUNITY, IT’S GENERATED BY THE GLOBAL COMMUNITY. >>WHEN WE’RE TALKING ABOUT LEARNING FROM EVERYONE, OBVIOUSLY, CHINA HAS A NATIONAL STRATEGY IN ALTERNATIVES OF HOW IT’S ROLLING OUT AI. SHOULD OTHER COUNTRIES HAVE A STRATEGY LIKE THIS? >>MANY COUNTRIES SHOULD HAVE A NATIONAL STRATEGY. AND ONE OF THE THINGS ABOUT AI, IT’S STILL SO IMMATURE THAT THERE’S ROOM FOR MANY NATIONS TO HAVE A BIG ROLE IN THE FUTURE AI WORLD THAT WE’RE BUILDING. I THINK WE CREATED TREMENDOUS WEALTH AND WE ALSO CONTRIBUTED TO WEALTH AND EQUALITY. A LOT WAS CONCENTRATED IN SILICON VALLEY AND BEIJING. ONE OF THE THINGS I HOPE TO SEE, FOR THE WEALTH OR THE FAIRLY SHARED AND PART OF THAT MEANS MAKING SURE THAT WE HAVE MANY CENTERS OF AI AROUND THE WORLD RATHER THAN CONCENTRATED PRIMARILY IN TWO PLACES. I HOPE THAT MANY NATIONS AROUND THE WORLD WILL HAVE THOUGHTFUL AI STRATEGIES SO THEY CAN BUILD SOMETHING FOCUSES ON SOLVING THE PROBLEMS. MANY COUNTRIES CAN DO UNIQUE WORK. SUPPORTING THEIR OWN LOCAL INDUSTRIES. >>WHERE ARE YOU LOOKING TO INVEST? I KNOW YOU WERE IN COLOMBIA RECENTLY? >>IN ADDITION TO CALIFORNIA, WE HAVE A TEAM IN COLOMBIA. IT’S ONE OF THE PLACES THAT I THINK HAS A LOT OF MOMENTUM IN A-I AND I’M OPTIMISTIC ABOUT BUILDING THERE. >>I WAS IN LONDON BACK IN APRIL. AND I THINK THAT THERE’LL BE MANY OPPORTUNITIES TO BUILD UP THEIR TEAMS. SO I’M VERY EXCITED ABOUT THE COLOMBIA TEAM BUT I WOULD ENCOURAGE ALL NATIONS, ALL NATIONS WITH SOME RESOURCES TO THINK THROUGH AN AI STRATEGY. >>A QUICK ASIDE ON THE AI FUND ARE YOU INVESTING THROUGH THAT RIGHT NOW? >>OH, YES. LARGE COMPANIES. AI FUND BUILDS AI START-UPS FROM SCRATCH. AND RIGHT NOW WE ARE BUILDING 10 COMPANIES IN PARALLEL. LANDING AI AS WELL AS, RUN BY MY FRIEND ALLISON DARCY. AND OUR TEAM AND OUR FRIENDS AND PATTERNS BRAINSTORM AND THEN OUR ASSOCIATES WILL SELECT IDEAS TO WORK ON. WE’RE VERY GOOD AT IDEAS. WE WORK ON IT FOR TWO WEEKS. AND THE IT’S USUALLY ONLY AFTER THE IDEA HAS REACHED A HIGH LEVEL OF CONVICTION. WE’VE VALIDATED CUSTOMER DEMAND AND VALIDATED TECHNICALLY FEASIBLE. WE’LL BRING ON A PERMANENT TEAM, SOUNDING TEAM, CEO, AND THEN ALSO INJECT CAPITAL. WE’LL FUND THE COMPANY IN ORDER TO HAVE IT GO FORWARD. >>ONE OF THE, WHENEVER THERE’S, WITH THE RISE OF THE INTERNET THERE WERE START-UPS THAT DID WELL. AND THERE ARE INCUMBENTS LIKE MICROSOFT AND APPLE THAT DID VERY WELL. I THINK AI FUND AND LANDING AI TRY TO DO THESE COMPLEMENTARY THINGS. MORE OFFICIALLY DONE AS A STARTUP. AND GO AFTER OPPORTUNITIES BY HELPING LARGE ENTERPRISES TRANSFORM. >>INTERESTING. SO WRAPPING STUFF UP. I’M PERSONALLY INTERESTED IN THIS. OBVIOUSLY, U.S. CONSUMERS AND CHINESE CONSUMERS KIND OF HAVE DIFFERENT EXPECTATIONS OF USER PRIVACY. AND AFTER RUNNING AN AI COMPANY IN CHINA, HOW DID YOUR THOUGHTS ON PRIVACY SKIP? >>I THINK THAT THE GAP IN EXCEPTIONS IS NARROWING. RECENTLY, THINGS IN CHINA CHANGE SO QUICKLY. IT’S WONDERFUL AND SOMETIMES VERY TERRIFYING. BUT RECENTLY, THERE WERE A FEW DATA BREACHES IN CHINA THAT WERE PUBLICIZED AND THIS IS CAUSING MANY CONSUMERS TO HAVE A GREATER DESIRE FOR PRIVACY. SOME OF THE THINGS WE SEE IN THE NEWS, IT CHANGES JUST IN A MATTER OF WEEKS OR MONTHS. I THINK THE GAP IN EXPECTATION IS PRIVACY. WHILE THERE IS STILL A GAP. IT’S BEEN NARROWING SOMEWHAT. >>DO YOU THINK BETWEEN WORKING AT GOOGLE AND BUY DUE. THOUGHTS ON YOUR OWN PRIVACY MAINTAINED? >>YES. NOT MANY PEOPLE KNOW THIS. I AM VERY CAREFUL WITH MY PERSONAL DATA PRIVACY. AND I DO MANY THINGS THAT I KNOW MANY OTHER PEOPLE DO NOT DO WITH MY OWN DATA. >>ARE YOU HIDING YOUR FACES FROM THE FACIAL RECOGNITION CAMERAS. >>THAT I DON’T CARE ABOUT. >>WHAT DO YOU CARE ABOUT? >>I THINK THAT WITHOUT NAMING THESE, I PUT A LOT OF THOUGHT INTO WHICH ARE THE COMPANIES THAT HAVE ACCESS TO MAY DATA. AND I MAKE SURE TO USE ENCRYPTION IN ALL THE PLACES WHERE IT SEEMS PRUDENT TO DO SO. MY LAPTOP DOES HAVE THAT LITTLE STICKER THING OVER THE WEB CAM. AND I THINK, I TRY TO BE THOUGHTFUL ABOUT WHAT ARE THE DIGITAL DEVICES AND WHAT IF SOMETHING HAPPENS TO ONE OF THEM AND HOW TO MAKE SURE THAT REASONABLE AMOUNTS OF SECURITY AND PRIVACY IS MAINTAINED. YEAH. >>GREAT. >>THANKS SO MUCH FOR THE CONVERSATION. APPRECIATE IT. >>THANK YOU, GUYS. >>GUYS, WE’RE IN THE HOME STRETCH. WE HOPE THAT YOU’LL STICK AROUND AT THE END OF THE SHOW. IN THE MEANTIME, WE ARE NOW GOING TO TALK ABOUT QUANTUM COMPUTERS WHICH OF COURSE ARE A WAYS FROM FULFILLING THE FULL PROMISE OF THEIR TECHNOLOGY BUT THERE ARE PLENTY OF COMPANIES NOW EXPERIMENTING WITH WHAT’S AVAILABLE TODAY. AND WE’LL BE TALKING ABOUT THAT WITH OUR ESTEEMED GUESTS, INCLUDING THE DIRECTOR OF, THE THEORETICAL SCIENTIST, AND GENERAL MANAGER OF QUANTUM SOFTWARE AT MICROSOFT. TALKING WITH THEM IS OUR HARDWARE EDITOR BRIAN HEEDER. >>I THINK IT’S GREAT THAT WE’RE COMING OUT RIGHT AFTER AN AI PANEL. AI IS FINAL AT A PLACE RIGHT NOW WHERE MOST PEOPLE HAVE A ROUGH IDEA OF A CONCEPT OF WHAT IT MEANS AND WE’RE NOT THERE WITH QUANTUM COMPUTERRING YET. WHO WANTS THE EASY TASK OF EXPLAINING QUANTUM COMPUTING IN 30 SECONDS? >>ANY OF US. >>GIVE ME AN ELEVATOR PITCH? >>QUANTUM COMPUTING USING THE PRINCIPLES OF QUANTUM MECHANICS WHICH MOST PEOPLE DON’T UNDERSTAND. >>SO FAR, SO GOOD. >>TO DO THINGS THAT A CLASSICAL COMPUTER COULD NEVER DO FOR CERTAIN APPLICATIONS. AND IF YOU WERE PITCHING IT TO SOMEONE AT INTEL YOU WOULD JUST ABOUT STOP THERE. INTEL IS ACTUALLY A CROSS SEMICONDUCTORS, QUANTUM MECHANICS ARE UBIQUITOUS WITH WHAT WE’RE DOING EVERY DAY. >>LET’S START WITH SOME REAL WORLD USES. WHAT ARE THE FIRST IMMEDIATE USE CASES THAT YOU SEE IN THE WORLD FOR QUANTUM COMPUTING. >>A KILLER APPLICATION IS IN BASIC QUANTUM CHEMISTRY AND MATERIALS SCIENCE. WE ARE STUDY REACTION RATES AND REACTION PATH WAYS WHICH ENABLES US TO START TO HELP DESIGN INDUSTRIAL CATALYSTS, AND WE CAN HELP DESIGN BETTER SOLUTIONS TO CARBON CAPTURE. AND BETTER SOLUTIONS TO FERTILIZER PRODUCTION. AND HELP MINIMIZE THE DEPENDENCY ON NATURAL RESOURCES LIKE NATURAL GAS AND THE PROCESSES WE USE TODAY. >>WOULD YOU LIKE TO FOLLOW UP? >>I AGREE THAT CHEMISTRY IS ONE OF THE FIRST. TO ME, I THINK IT’S EVERYONE WANTS THE KILLER APP. I ALWAYS LOOK AT IT AS WE STOPPED THINKING ABOUT SIMULATING QUANTUM PHYSICS. WE DON’T REALLY KNOW THE POWER. IT WAS TOO HARD A CLASSICAL PROBLEM TO DO. GETTING THE STABILITY TO START TO THINK ABOUT THINGS IN A DIFFERENT WAY, WE CAN EXPLORE ANYTHING THAT REQUIRES QUANTUM. AND THE OTHER AREAS WE’RE PARTICULARLY INTERESTED IN IS USING LARGE MATRICES. CHEMISTRY FEELS LIKE THE RIGHT ONE BUT THE RIGHT ONE IS NOT KNOWN YET. >>A BETTER WAY OF ASKING THE FIRST QUESTION, GIVEN THESE EXAMPLES, WHY IS QUANTUM COMPUTING BEST TAILORED TO SOLVE THE PROBLEMS? >>CHEMISTRY IS JUST HARD TO REPRESENT ON A CLASSICAL COMPUTER BECAUSE YOU’RE TRYING TO REPRESENT THE LAWS OF PHYSICS, THE LAWS OF QUANTUM PHYSICS, AND THAT RESULTS IN AN EXPONENTIAL BLOWUP. WE JUST CANNOT REPRESENT THEM. THIS GIVES US A WAY OF HEPPING THEM WITH A MUCH MORE EFFICIENT WAY. >>WHEN YOU’RE MARRYING A SYSTEM BUILT ON QUANTUM MECHANICS, MATCHING THAT WITH A PROBLEM THAT REQUIRES THAT REPRESENTATION IS IDEAL. AND QUANTUM CHEMISTRY AND MATERIAL SCIENCE ARE TWO AREAS WHERE THE REPRESENTATION IS REALLY KEY. AND QUANTUM COMPUTERS PROBLEMS BILLIONS OF YEARS SPEEDUPS. >>WHEN ARE WE LOOKING, WHAT’S A REALISTIC WINDOW FOR THE FIRST APPLICATIONS TO START APPEARING? >>WE’LL MEET BACK HERE. >>FOR THOSE APPLICATIONS YOU REALLY REQUIRE WHAT I WOULD CALL A SCALABLE COMMERCIAL SIZE QUANTUM COMPUTER. AND OF COURSE, WE’RE NOT THERE YET WITH THE DEVICES WE HAVE TODAY. BUT WE’RE ESTABLISHING THAT PATHWAY TOWARDS SUCH A QUANTUM COMPUTER. ON THAT PAST TOWARDS THE SCALED QUANTUM DEVICE, WE CAN HAVE GAN ITEM IMPACT. AS WE’VE LEARNED ABOUT THE ALGORITHMSES FOR CHEMISTRY, WE’VE LEARNED NEW TECHNIQUES THAT ENABLE US TO BRING THOSE SOLUTIONS FORWARD ON CLASSICAL HARDWARE. AND WE CALL THESE QUANTUM INSPIRED. ENABLES US TO HAVE SPEEDUPS RIGHT NOW. EVEN WITHOUT THAT SCALED QUANTUM HARDWARE. >>I’M HEARING 5 TO 10 YEARS FROM A LOT OF FOLKS WHEN IT COMES TO THESE BEING USEFUL IN OUR LIVES. >>IF YOU TAKE A LOOK AT THE HISTORY OF SEMICONDUCTORS. THE BIG INFLECTION POINTS HAVE BEEN ON A 5 TO 10 YEAR TIME FRAME. THE FIRST INTEGRATED CIRCUITED WAS 1958. THE FIRST MICRO PROCESSOR WAS 19 EVIDENT. SO THESE BIG INFLECTION POINTS THAT CHANGE THE WORLD DON’T HAPPEN OVERNIGHT. AND 5 TO 10 YEARS FOR A QUANTUM COMPUTER THAT’S GOING TO CHANGE YOUR LIFE OR MINE IS REALLY QUITE REASONABLE. >>I WANTED TO DRILL DOWN ON THE SPECIFICS. EVERYBODY AGREES THAT IT’S REALISTIC AS YOU SAID. WE ARE SEEING SOME APPLICATIONS OF THESE RIGHT NOW. BUT WHAT ARE THE MAJOR HURDLES THAT COMPANIES NEED TO OVERCOME TO GET TO THE 5 TO 10 YEAR POINT? >>I HAVE A SIMILAR VIEW TO CHRISTA. ONE OF THE BIGGEST HURDLES, AND IT PUTS THE ERROR BAR ON THE NUMBER. HOW MUCH ERROR CORRECTION IS NEEDED. WE HAVE DEVICES NOW. AT IBM WE GIVE IT TO YOU THROUGH THE CLOUD. UP TO 20 CUE BITS. IF YOU GO WITH IS THAT WE KNOW IN THE COMMUNITY. THERE’S A LOT OF OVERHEAD TO KEEP PUSHING THE ERROR RATES GOING DOWN. WE’LL GET TO THESE DEVICES WHICH WE CAN’T SIMULATE AND WE CAN START TO EXPLORE HOW TO MAKE THESE APPLICATIONS WORK ON REALISTIC DEVICES BY USING. TO PUSH DOWN THE ERROR RATES. I’M COMFORTABLE WITH THIS NUMBER BECAUSE THIS IS THE PERIOD WHERE WE’LL BE WAY PAST WHERE WE CAN SIMULATE >>SO THIS IS THE POINT IN THE PANEL WHERE I TURN EVERYONE AGAINST EACH OTHER. ALL OF YOU ARE FROM VERY VENERABLE COMPANIES. WHY IS EACH ONE OF THEM UNIQUELY SUITED TO BRING THAT BREAK THROUGH? >>I’LL START. WE’RE REALLY EXCITED ABOUT WHAT IS KNOWN AS A STEM CUBE. THE SPIN COUNTS WE TRAP A SINGLE ELECTRON. INTEL MAKES 400 QUADRILLION TRANSISTORS A YEAR. THAT’S ONE FOR EVERYONE ON THE PLANET PER MINUTE OF EVERY HOUR. IF WE CAN HARNESS THAT KNOWLEDGE AND OUR MANUFACTURING PROWESS TO BRING A CUBIT SYSTEM LIKE THAT, WE THINK THAT’S AN ADVANTAGE. >>MICROSOFT IS TAKING A UNIQUE APPROACH TO THE SPACE. CAN YOU TALK ABOUT THAT. IN >>OUR APPROACH IS DIFFERENCE FROM THE OTHER TWO APPROACHES REPRESENTED HERE TODAY. WE’RE WORKING ON A TOPLOGICAL CUBIT. WE HAVE INVESTING IN THE DESIGN AND TOPLOGICAL BASED SYSTEM. BY DEVELOPING A CUBIT THAT’S MORE RESISTANT TO ERRORS, WE’LL BE ABLE TO SCALE MORE RAPIDLY, AND HAVE LESS OVERHEAD IN TERMS OF OTHER RESOURCES. REQUIRED TO REACH FULL SCALE. TO DO THE TYPES OF PROJECTS WE TALKED ABOUT AT THE BEGINNING OF THE SESSION. >>EVERYBODY IS ON A SIMILAR TIMELINE. IBM GOT A BIT OF A HEAD START. YOU’VE BEEN WORKING ON THIS FOR A WHILE NOW. >>WELL, WE STARTED IN QUANTUM INFORMATION RIGHT BACK IN THE BEGINNING WITH CHARLIE BENNETT ASKING FUNDAMENTAL QUESTIONS ABOUT WHAT DOES IT MEAN TO USE QUANTUM INFORMATION THEORY? >>WE’RE DOING AN APPROACH. AND MY BELIEF IS BUILDING THINGS. AND THIS APPROACH IS NICE BECAUSE IT ALSO IS EQUIVALENT TO ALL OF THE FABRICATION. >>THIS ALLOWS US TO EXPLORE WHAT WE CAN DO WITH THESE. WE’RE ON A PATH TO KEEP PUSHING THE QUALITY OF THESE DEVICES. WE’RE GOING TO DOUBLE THEIR EFFECTIVE POWER EACH YEAR. >>WE’RE ATTEMPTING TO APPROACH THIS WITHIN THE CONTEXT OF ENTERPRISE. IS NOW THE TIME WHEN COMPANIES SHOULD BE PREPARING FOR IT? >>FIRST OF ALL. LET’S FOCUS ON IF WE SAID 10 YEARS AS A GOAL. WE NEED A FEW THINGS TO HAPPEN. WE NEED TO DEVELOP THE WORK FORCE. THROUGH THE NATIONAL QUANTUM INITIATIVE. THE NEXT GENERATION OF PROGRAMMERS AND SCIENTISTS. AT THE SAME TIME, WE’RE STARTING TO SEE IN THE CUSTOMER BASE, WE’RE STARTING TO SEE PEOPLE ASK DOES MY PROBLEM MAP TO A QUANTUM COMPUTER? >>THEY NEED TO START ENOUGH TO KNOW THAT WHEN THE TECHNOLOGY ARRIVES THEY’LL BE ABLE TO HARNESS IT. >>WE HAVE SEVERAL COMPANIES WE WORK WITH ENTERPRISES RIGHT NOW WHO WE WORK WITH AND CODEVELOPING SOLUTIONS FOR THEIR HARD PROBLEMS. AND AS I MENTIONED EARLIER, WE CAN ACTUALLY DELIVER IMPACT TODAY USING QUANTUM INSPIRED METHODS AND THAT PAVES THE ROAD FOR IMPACTS FROM THE FULL SCALE QUANTUM DEVICE. SO WHEN YOU HAVE IMPROVEMENTS COMING FROM QUANTUM INSPIRED ALGORITHMS THIS COMES WITH THE PROMISE OF HAVING FURTHER SPEEDUPS. AND ENTERPRISES ARE ENGAGED TODAY. AND I THINKS THE TIME FOR COMPANIES TO UNDERSTAND WHAT THIS TECHNOLOGY CAN BRING TO THEIR ORGANIZATIONS. >>I AGREE. SO WE’RE ENGAGED WITH ENTERPRISES. WE TAKE A DIFFERENT APPROACH. HOW DO WE BRING THESE TWO TOGETHER? AND IT’S A GREAT TIME. WE CAN BRING OUR THEORY. WE CAN BRING THEIR EXPERTISE. WE CAN BRING OUR SYSTEMS. WE’VE DONE JOINT PUBLICATIONS SHOWING HOW THEY PERFORM. AND IT’S THE RIGHT TIME, GETTING QUAWB ITEM READY. >>>EVERYBODY WANTS TO BE A AHEAD OF THE CURVE. WHAT CAN COMPANIES DO IN HOUSE TO PREPARE STAFF FOR THE PASSENGER. >>GETTING EDUCATED, GETTING INTUITION. THERE’S A DIFFERENT MODEL OF COMPUTATION. UNDERSTANDING WHAT CAN BE DONE. WORKING WITH MULTIPLE COMPANIES AND SCIENTISTS TO SEE HOW THESE THINGS APPLY. AND LEARNING AND EXPERIMENTING WITH THE MACHINES OUT THERE OR THE SIMULATORS THEY HAVE ACCESS TO. >>THERE ARE TOOLS THAT COMPANIES CAN USE TO START LEARNING ABOUT QUANTUM SOLUTIONS. THE PREVIOUS PANEL ON AI, RIGHT? MANY COMPANIES ARE LEARNING ABOUT AI, MACHINE LEARNING, AND HOW THAT CAN BE BROUGHT TO THE BUSINESS. >>WE HAVE THE QUANTUM DEVELOPMENT KIT AND FOCUSED PROGRAMMING LANGUAGE. >>YOU CAN SIMULATE THOSE ALGORITHMS. YOU CAN UNDERSTAND FOR A PROBLEM THAT YOU’RE THINKING ABOUT HOW BIG OF A COMPUTER MIGHT I NEED. HOW ABOUT CUBITS? HOW MUCH RUN TIME? YOU CAN USE THE TOOLS WE OPEN SOURCED IN JULY TO START STUDYING AND DEVELOPING QUANTUM ALGORITHMS TODAY. AND THAT’S A GREAT WAY FOR COMPANIES AND DEVELOPERS IN GENERAL TO START ENGAGING WITH QUANTUM NOW. >>ACTUALLY EDUCATING THE WORK FORCE, NOT JUST BEFORE PANES. I’M CURIOUS WHAT EACH OF YOUR COMPANIES ARE DOING ON THAT END? ARE YOU TAKING A PRO ACTIVE APPROACH TO MAKE SURE THAT THE U.S. IS AHEAD OF THE CURVE FOR THE TECHNOLOGY? >>THIS IS ONE OF THE AREAS WHERE THE THREE COMPANIES AGREE. WE’VE BEEN ACTIVE IN THE ACT SIGNED BY THE PRESIDENT LAST SEPTEMBER. AS APPROPRIATIONS, GET. YOU’RE STARTING TO SEE ACTIONS BY THE. AND I THINK THIS IS AN AREA WHERE THERE’S A LOT OF ROOM TO GO AND INTENDS TO HAVE NOT ONLY SUPPORT FROM COMPANIES SUCH AS US BUT ON CAPITOL HILL, BIPARTISAN SUPPORT SIGNED BY THE PRESIDENT. >>>I, WE’RE OFTEN CHASING CURRENT PROBLEMS. WHAT ROLE HAS THE GOVERNMENT PLAYED? AND WHAT ROLE CAN IT CONTINUE TO PLAY IN ORDER TO MAKE SURE THAT WE REMAIN COMPETITIVE IN THE SPACE? >>WELL, CONTINUING TO FUNNEL FUNDING IN THIS DIRECTION FOR THE DEVELOPMENT OF CURRICULUM. ON THE JOB TRAINING OPPORTUNITIES, AND OF COURSE, CONTINUED RESEARCH. QUANTUM INFORMATION SCIENCES IS A BROAD FIELD. WE’LL SEE MANY. LOTS OF AVENUES HERE WHERE THE GOVERNMENT CAN CONTINUE TO HELP BOLSTER A FUTURE QUANTUM ECONOMY HERE IN THE UNITED STATES. A BIG ONE IS CURRICULUM DEVELOPMENT AS WELL. AND ENABLING MORE ON THE JOB TRAINING. AND MICROSOFT HAS PERSONNED WITH. IT’S SUPER IMPORTANT THAT WE EDUCATE TOWARDS STEM IN THE UNITED STATES. NOT JUST THE GRADUATE LEVEL. >>ARE THERE EXAMPLES OF UNIVERSITIES DOING A GOOD JOB OF THIS. >>WILL I BE SET ON THE RIGHT PATH? >>THINK THINK SO. MIKE MICROSOFT. WE ARE PARTICIPATES WITH THEM. I SEE I THINK THE U.S. HAS A LOT OF GREAT UNIVERSITIES AND M.I.T. THEY ARE MAKING IT A PART OF THEIR WORK. >>WHAT’S A GOOD EXAMPLE OF A COMPANY RIGHT NOW IN THE ENTERPRISE THAT’S DOING A PARTICULARLY GOOD JOB OF EDUCATING WITHIN AND GETTING THEMSELVES READY FOR THIS TECHNOLOGY? >>WE HAVE SEVERAL BEEPSES WE’RE WORKING WITH THAT ARE SEVERAL ENTERPRISES THAT WE’RE WORKING WITH. WE’RE WORKING WITH WILLIS TOWERS WATSON, A BROKE RAGE AND SOLUTIONS COMPANY. WORKING WITH THEM ON PORTFOLIO OPT MIATION. MORE RECENTLY, PERSPECTIVE HAT A PARTNERSHIP WITH CASE WESTERN RESERVE UNIVERSITY WHERE WE ARE ABLE TO IN PARTNERSHIP WITH MARK GRISWOLD AND HIS TEAM IMPROVE MRI SCAN SPEEDS BY THREE TIMES AND REPLY ABOUT THE ABILITY TO DETECT THINGS LIKE CANCER AND MULTIPLE SCLEROSIS, EPIDEMIC LIP SEE, AND THEY ARE SEEING QUANTUM IMPACTS TODAY. >>WHAT CAN BE DONE IN THE QUANTUM SPACE. WE’RE TALKING ABOUT FURTHER OFF THINGS. IF YOU DO WANT TO SIT DOWN AND GET FAMILIARIZED WITH THE TECHNOLOGY, WHAT DOES IT LOOK LIKE IN 2019? >>RIGHT YOU CAN GO THERE AND WORK AND START USING THEM. CHRISTA MENTIONED THREE COMPANIES, WE’RE PARTNERING WITH MANY LIKE JSR, MITSUBISHI CHEMICAL. THEY ARE ALL INTERESTED IN UNDERSTANDING. I DON’T LIKE TO CALL THEM TOY PROBLEMS. THEY’RE IN THE SOLUTIONS. WE NEED A NICE WORD. HOW ERRORS WILL AFFECT IT. >>SO IT’S MORE ABOUT FAMILIARIZING YOURSELF WITH THE TECHNOLOGY THAN SOLVING BIG PROBLEMS. >>A IN THE FUTURE WE NEED TO UNDERSTAND WHEN IT’S GOING TO BE IMPORTANT. AND HOW THE PROBLEMS WILL SCALE. AND I’M GETTING A BIG GRASS OF HOW IT’S GOING TO WORK. >>YOU CAN DO THAT WITH SMALL SEASONS OR SMALL SIMULATORS. >>AGAIN WE’RE TALKING ABOUT THESE LARGER COMPANIES, OBVIOUSLY, ALL OF YOU ARE FROM REALLY LARGE COMPANIES YOURSELVES. WHAT ARE SOME OF THE OPPORTUNITIES WE’RE SEEING IN THE START-UP SPACE. WHAT CAN A SMALLER COMPANY DO? >>THERE’S SOMETHING LIKE 100 START-UPS IN THE QUANTUM COMPUTING SPACE. AND THE SPACE IS A LITTLE INVERTED TO SOME NEW TECHNOLOGIES AND THERE’S RELATIVELY FEW IN THE HARDWARE SPACE AND MORE IN THE SOFTWARE APPLICATION. THE FOR EXAMPLE FOR THE HARDWARE. THE WIRING OR INTERCONNECTS THAT YOU NEED TO. IT’S A MYRIAD OF SKILLS. THE STARTUPS TEND TO BE MORE HEAVILY WEIGHTED FOR THE TOP OF THE COMPUTE STACK. >>WE HAVE A GOOD REASON WITH A FEW START-UPS AS WELL. THERE ARE A LOT OF PEOPLE. CAN I TAKE A CIRCUIT AND COMPILE IT INTO HARDWARE. GREAT READY FOR THE NOSE AND THEN A LAYER THAT ALLOWS YOU TO TRY AND MAKE THAT APPLICATION OR THAT CIRCUIT YOU WANT TO RUN WORK BETTER. >>AS JIM SAID THERE ARE MANY FROM THE TOP LOOKING IN THE APPLICATIONS BASE. A LOT. THERE’S MANY AT DIFFERENT. >>AND WE’VE PARTNERED WITH SEVERAL DIFFERENT START-UPS. ONE IS ONE CUBIT. WE’VE PARTNERED WITH THEM TO BRING ABOUT NEW LIBRARIES FOR QUANTUM CHEMISTRY. USERS CAN WORK WITH. AND MORE TYPES OF ALGORITHMS USING A LIBRARY THAT WE CODEVELOPED. THERE’S GREAT OPPORTUNITY FOR INDUSTRY AND STANDUPS. >>LIKE LAY THE GROUNDWORK FOR THE TECHNOLOGY THAT’S TO? BRAT GREAT A SUPPORT SYSTEM. >>I THINK THEY HAVE TO BE A PART OF. HOW THIS ALL GOES TOGETHER AND HOW IT MIXES WITH AS JIM SAID THE GOVERNMENT LABS. IN THE NEXT FEW YEARS, IT’S GOING TO START TO MIX AND WE’LL SEE A REAL ECOSYSTEM EMERGING WHERE WE’RE BUILDING BIGGER AND BIGGER QUANTUM SYSTEMS AND WORKING OUT WHAT CAN BE DOWN AND PUTTING IT TOGETHER. >>WE’RE FRIENDLY ON STAGE BUT IN CERTAIN WAYS, YOU ARE A COMPETITOR. I’M WONDERING HOW MUCH THERE IS BETWEEN BIG. IT SEEMS THAT EVERYONE IS WORKING TOWARDS. OUR COMPANIES WORKING TOGETHER? >>TO FURTHER THE TECHNOLOGY? >>QUANTUM COMPUTING HAS BEEN BORN OUT OF A HIGHLY COLLABORATIVE CULTURE. AND WE CONTINUE TO WANT TO SEE TO OPENLY PUBLISHING MUCH OF THE RESEARCH. THAT’S REALLY ABOUT KNOWING THAT TO GET TO THE END GOAL WE NEED TO WORK TOGETHER. AND HAVE PARTNERSHIPS BETWEEN INDUSTRIES, START-UPS, GOVERNMENT, AND ACADEMIA. HAVING THAT OPEN LENDS WILL HELP US ADVANCE FASTER TO THE GOAL. THIS IS A LIFE’S PASSION AND LIFE WORK FOR MANY OF US. AND WE WANT TO SEE IT DELIVERED. >>I’M GOING TO DISAGREE A LITTLE BIT. I THINK WE’RE NOT WORKING WELL ENOUGH AS A COMMUNITY. IF YOU TAKE A LOOK AT SOMETHING LIKE SRC. THEY’LL FOCUS ON TRANSISTOR TECHNOLOGIES THAT ARE 10 YEARS AWAY. THERE’S A TERRITORIAL NATURE. ONE OF THE GET GETS INVOLVED. THE OPPORTUNITY IS THERE. WE NEED TO FOLLOW THROUGH. >>AND THERE ARE CONSORTIUMS FORMING NOW OF THAT VERY NATURE WHICH IS BRINGING GROUPS TOGETHER. >>I WOULD PUT MYSELF SOMEWHERE BETWEEN THE TWO. I THINK WE’RE VERY OPEN AND PUT OURSELVES OUT THERE. >>AT THIS PAINT IN TIME, HAS THESE BECOME FULL SCALE AND YOU NEED TO HAVE DIFFERENT PARTS. THE MOMENT THERE’S STILL I AGREE THAT IBM BUILDS THE HARDWARE. THEY’RE. IN THE SOFTWARE SPACE. I THINK OVER TIME WE’LL TRAIL REAL CONNECTION POINTS AND WE HAVE TO WORK >>I LIKE TO THINK WE’RE BUILDING THE COMPILER. A LOT OF PEOPLE COME IN AND BUILD KY TYPES OFS IFS IF WE CAN GET ENERGY >>>WE ARE SADLY OUT OF TIME. LET’S MEET BACK IN 5 TO 10 YEARS AND TALK ABOUT HOW THINGS WORKED OUT. >>THANKS SO MUCH. >>HELLO AGAIN. SO BEFORE WE CLOSE OUT WHAT’S BEEN AN AMAZING AND INSTRUCTIVE DAY, WE ARE GOING TO HAVE ONE MORE CONVERSATION. THIS ONE ABOUT SOMETHING THAT I’M SURE MANY OF YOU IN THE AUDIENCE CAN RELATE TO WHICH IS HOW TO OVERCOME THE DATA GLUT. WITH HAVE WITH US THE COFOUNDER OF SNOWFLAKE COMPUTING. AND PORT WORKS AND A SPECIAL INTERVIEWER WHICH IS THE NEWS DECK. THANKS. >>ALL RIGHT. HEY, EVERYONE. HOW ARE YOU DOING? >>I’M ALEX WILLIAMS OF THE NEWS STACK. AND LET’S DO A QUICK INTRODUCTION. WE HAVE OF SNOWFLAKE. OF DATA BRICKS, AND WE HAVE OF PORT WORKS, HOW ARE YOU ALL DOING? >>SUPER. >>AWESOME. >>ONE OF THE THINGS I WANT TO HELP DO IS HELP PEOPLE UNDERSTAND WHAT ARE THE DIFFERENCES WHEN WE THINK ABOUT DATA MANAGEMENT? AND THIS WHOLE CONCEPT OF DATA GLUT. WHAT DOES THAT MEAN TO YOU? AND I’M CURIOUS BECAUSE ONE OF THE THINGS YOU DEAL WITH A LOT IS THE PEOPLE WHO ARE IN THE DEV OP SPACE. AND TECHNOLOGY IS ADAPTING USING CONTAINERS FOR EXAMPLE. YOU’RE WORKING WITH THE ENTERPRISE COMPANIES OUT THERE. AND TRYING TO HELP THEM TRANSFORM TO SOME DEGREE. AND I THINK THERE’S A DIFFERENT PERSPECTIVE THAT THE TWO OF YOUR BRING. TALK A LITTLE BIT ABOUT WHAT IT IS. >>SO PORT WORKS IS A CONTAINER KIND OF DATA PLATFORM. WHAT WE’RE REALLY DOING IS DOING AN EXTENDING SO THAT WE CAN DO STORAGE AND DATA MANAGEMENT. A LAYER CAKE OF WHAT CUSTOMERS ARE TRYING TO DO. LET’S TAKE A CUSTOMER LIKE T- MOBILE. THEY ARE TAKING THE I WATCH INFORMATION AND ON BOARDING CUSTOMERS ONTO A PLATFORM BUILT ON CONTAINERS. THEY’RE TAKING THE ON BOARDING SOFTWARE AND THAT’S RUNNING IN CONTAINERS, IT’S BEING ORCHESTRATED WITH COMMUNITIES. THE CONTAINERS ARE BEING ORCHESTRATED AND ALL OF THE DATA NEEDS TO BE MANAGED AND ORCHESTRATED AND THAT’S THE ROLE THAT PORT WORKS HAS. WE SIT AS AN OVERLAY ON TOP OF EXISTING TORNADO WARNING. BUT WHAT WE’RE DOING IS ENSURING THAT ALL OF THE DATA SLAs FOR PERFORMANCE, FOR HIGH AVAILABILITY, FOR BACKUP TO ENSURE DISASTER RECOVERY IS ALL BEING MANAGED SO THE APPLICATIONS CAN ALWAYS BE RUNNING AND ENSURE THE AT THE IS ALWAYS AVAILABLE. >>IT’S LIKE A NEW WAY OF THINKING ABOUT DATA. IT’S ALWAYS THERE. AND I KNOW AT DATA BRICKS YOU TALK A LOT ABOUT THE WAY DATA IS USED TO TRANSFORM. HOW DO YOU THINK ABOUT TRANSFORMATION OF DATA AND WHAT ARE THE REQUIREMENTS FOR IT NOW? IS IT BATCH WHICH IS LIKE TAKING DATA IN INCREMENTS AND THEN BEING ABLE TO TRANSFORM IT INTO SOMETHING THAT YOU NEED? AND THEN THERE’S STREAMING WHERE YOU DREAM THE DATA ALL THE WAY THROUGH. WHAT IS YOU TAKE ON IT? >>THAT’S A GREAT QUESTION. IT DEPENDS ON THE USE CASE. WHAT WE DO IS WE ENABLE COMPANIES WITH MASSIVE AMOUNTS OF DATA. WAY MORE THAN CAN FIT ON 10 MACHINES, AND IT DEPENDS ON THE USE CASE. WHAT THEY’VE DONE IS THEY CAN BUILD BIG DATABASE OF THE GENOMES OF ALL THE PATIENTS AND A BIG DATABASE OF ALL OF THE DISEASES AND THEY USE MACHINE LEARNING AND AI. AND DEVELOP DRUGS TO ATTACK THOSE. THIS PARTICULAR USE CASE IS MORE BATCH ORIENTED. AND THEY WANT TO FIND THE G GNOME RESPONSIBLE. WE HAVE ANOTHER CUSTOMER WHICH AND THEY WANT IT IN REALTIME TO BE ABLE TO DETECT IF FOR INSTANCE IF THERE ARE PEDOPHILES ON THE NETWORK PRETENDING THAT THEY ARE 14- YEAR-OLDS. THAT’S A DIFFERENT USE CASE. IT KIND OF DEPENDS ON THE USE CASE. BUT MORE AND MORE WE’RE SEEING REALTIME APPEAR IN OUR CUSTOMER BASE. >>AND IT’S A LOT ABOUT THE DATA IN THE CLOUD, ISN’T IT? WHAT WE’RE SEEING IS A TREMENDOUS GENERATION OF DATA, CORRECT? >>WE HAVE MACHINE DATA THAT’S JUST BEING COMING OUT OF APPLICATION DEVELOPERS WHO ARE USING MONITORING TECHNOLOGY. >>PUBLICS ARE GENERATING A LOT OF DATA THEMSELVES. WEB LOGS, AND THESE TWO BASIC CHALLENGES, ONE IS THE VOLUME. A HUMONGOUS AMOUNT OF DATA. THE OTHER CHALLENGE IS THE STRUCTURE OF THE DATA. THE CHALLENGE OF THE DATA IS VERY REAL. AND IF YOU WANT A COMPANY TO BE, YOU NEED TO, THAT DATA WITH BUSINESS DATA. ONE SYSTEM AND THAT’S WHAT SNOWFLAKE DID IS TO REINVENT THE HOUSING FOR THE BUSINESS DATA AND LARGE VOLUME OF BIG DATA IN THE CLOUD. SO AS A SERVICE AND THE SCALE HERE IS SUPER IMPORTANT, RIGHT? BECAUSE OF THE VOLUME, YOU NEED TO SCALE. NOT ONLY BECAUSE OF THE DATA BUT BECAUSE OF THE USERS. EVERY ENTERPRISE AND THIS IS WHAT WE SEE FROM OUR CUSTOMERS, EVERY COMPANY TODAY WANTS TO BE DATA DRIVEN. LIKE EVERYONE WANTS TO ACT LIKE GOOGLE. LOOK AT DATA. MAKE DECISIONS BASED ON THE DATA. AND EVERY EMPLOYEE POTENTIALLY THE GROWTH MAKES THE SYSTEM VERY CHALLENGING. BEING IN THE CLOUD WHERE YOU HAVE UNLIMITED RESOURCES IS A BIG PLUS AND THAT’S WHY WE DID SNOWFLAKE THAT WAY. >>I WANT TO AGREE. FOR MACHINE LEARNING AND AI, PEOPLE HAVE BEEN DOING MACHINE LEARNING FOR 60 YEARS, IT WASN’T WORKING WAS FOR THE FIRST 50 YEARS. WHEN YOU THROW IT WITH MODERN HARDWARE YOU START GETTING SUPER HUMAN RESULTS. IF UP THE MASSIVE DATA SETS, YOU HAVE AN ADVANTAGE. IF YOU DON’T, YOU’RE AT A DISADVANTAGE. >>WHAT’S THE DATA GLAT? WHAT IS THAT DATA GLUT? YOU GUYS ARE DEALING WITH SYSTEM ADMINISTRATORS AND I.T. OPERATIONS TEAMS. WHAT IS THE DATA GLUT THAT THEY FACE? >>THE PART OF THE INDUSTRY THAT WE’RE FACILITATING IS REALLY AROUND AGILITY. TODAY NOT ONLY IS THERE A LOT OF DATA BUT NOW THAT DATA IS COMING AT THEM IN REALTIME. WE TALK ABOUT REALTIME. THERE’S MASSIVE AMOUNTS OF IT. AND REALLY THE ROLE OF THE HAS CHANGED. TEN, 12 YEARS AGO, THE CIO WAS FOCUSED ON THE INFRASTRUCTURE. THEY CARE AND FEEDING OF THAT INFRASTRUCTURE USING VIRTUALIZATION. MAYBE EVEN USING INFRASTRUCTURE, RENTING IT INSTEAD OF OWNING IT. SO THE FOCUS FROM INFRASTRUCTURE HAS NOW CHANGED DRAMATICALLY TO FOCUSING ON APPS AND DATA. APPS AND DATA IS HOW THE NEW CIO IS GOING TO WIN AND HELP THEIR ENTERPRISE WIN. SOME OF THE STUFF THAT WE’VE BEEN HEARING BUT THERE’S ANOTHER ASPECT OF IT WHICH IS THE APPLICATION THEMSELVES ARE CHANGING DRAMATICALLY. LET’S GIVE YOU AN EXAMPLE. WE’VE GOT DREAM WORKS AS A CUSTOMER. SO DREAM WORKS IS, HAS PEOPLE WHO ARE CREATING THESE NEW CONTENT AND NEW WAYS TO PROCESS THAT DATA. THEY HAVE LOTS OF DIFFERENT APPLICATIONS, OTHER THINGS THAT DO RENDERING. AND THEY HAVE PEOPLE WHO CONTRIBUTE FROM ALL OVER THE WORLD. IN THIS CASE, IT’S A PROLIFERATION OF DATA COMING FROM DIFFERENT CONTENT CREATORS. HOW DO THEY ENSURE THAT ALL OF THIS WILL WORK AND FROM PEOPLE WHO ARE NOT EXPERTS IN INFRASTRUCTURE? THE WAY THEY DO THAT IS TO CONTAINERIZE THE MODELS. JUST LIKE GENOMICS. CONTAINERS ALLOW PEOPLE TO RAPIDLY MAKE CHANGES IN THEIR APPLICATIONS AND DEPLOY THEM INSTANTLY ANYWHERE WITH A GUARANTEE THAT IT’S GOING TO WORK. >>AND FOR THOSE WHO ARE NOT FAMILIAR WITH CONTAINER TECHNOLOGIES, THE CONTAINER IS A PROCESS THAT LIVES ON TOP OF THE OPERATING SYSTEM AND THE ORCHESTRATER IS, THAT ORCHESTRATES ALL THE CONTAINERS SO YOU CAN MOVE CODE AROUND QUICKLY AND CALL ON THE DATA. >>EXACTLY. SO IN A WAY YOU ARE CONTAINERIZING YOUR APPLICATION AND MAKING THAT MOBILE AND PORTABLE. AND THEN COMES, WHICH TAKES MULTIPLE OF THE CONTAINERS. AN APPLICATION CAN HAVE SEVEN CONTAINERS AND HUNDREDS OF USERS, UP THOUSANDS OF CONTAINERS, AND IT ORCHESTRATES WHERE THE CONTAINERS LAND. WHEREVER THE CONTAINERS LAND, THE DATA IS AVAILABLE. SO WE PROVIDE DATA. AND IF THERE’S ANY FAILURE IN ANY PART OF THE NETWORK, THE CONTAINER COULD FAIL, THE NOTE COULD FAIL. WE ENSURE THAT THE DATA IS AVAILABLE. AND WHEN THE NEW CONTAINER GETS. DATA AVAILABILITY. AND DISASTER RECOVERY. YOU CAN HAVE WHOLE RACKS FAIL. OR PARTS OF A DATA CENTER FAIL OR PARTS OF A CLOUD FAIL. WE ENSURE THAT THE DATA CAN BE RECOVERED AND RUN INSTANTLY AND THE APPLICATION RUNS INSTANTLY. SO FOR US, THE IDEA IS THAT DATA NOW IS DISTRIBUTED. IT’S UBIQUITOUS. IT’S REALTIME. AND IT’S MASSIVE AMOUNTS OF DATA ORCHESTRATING ALL OF THAT AT CONTAINER SCALE IS SOMETHING THAT THE OLD STORAGE PARADIGM FAILS TO DO. TRAFFIC LIGHT STORAGE IS SILOED AND WE’RE PROVIDING AN OVERLAY THAT ENSURES ALL OF THAT CAN STILL WORK. >>WHEN I HEAR, I’M THINKING ABOUT THE AMOUNT OF DATA THAT’S CREATED FROM THAT. AND THE MASSIVE AMOUNTS OF DATA THAT’S SCALING UP. THAT CREATES ITS OWN DATA GLUT. IN YOUR WORLD YOU’RE TRANSFORMING DATA AT A RATE THAT MAKES IT MANAGEABLE. HOW ARE YOU DOING THAT? WHAT IS IT THAT MAKES YOUR TECHNOLOGY GIVE IN THE MARKETPLACE? YOU ARE A BIG RELIER ON SPARK WHICH MAYBE YOU CAN EXPLAIN WHAT SPARK IS TO PEOPLE WHO MAY NOT BE FAMILIAR WITH IT. AND HOW DO YOU THINK ABOUT THAT DATA GLUT AND MAKE IT SOMETHING THAT’S AN ASSET AND A VALUE. >>WE DEVELOPED PROJECTS THAT HAVE MASSIVE ADOPTION NOW ON THE PLANET. THEY ARE NOT ALL CUSTOMERS OF OURS. DELTA LAKE AND THE PROJECT CALLED ML FLOW. SPARK PROJECT ENABLES YOU TO TAKE MASSIVE AMOUNTS OF DATA AND DO PROCESSING ON IT. AND THE WAY IT DOES IT IS IT TURNS YOUR DATA CENTER INTO A COMPUTER. WE USED TO USE A COMPUTER TO DO DATA PROCESSING ON. BUT THE COMPUTERS ARE NOT SCALING ANY MORE. SPARK TURNS YOUR DATA CENTER INTO ONE COMPUTER. ONE GIANT VIRTUAL COMPUTER. AND YOU CAN PROCESS HOWEVER MUCH DATA YOU WANT WITH IT. AND WE DO THAT IN THE CLOUD. THE DELTA TECHNOLOGY THAT WE HAVE UNABLES YOU TO DO THIS REALLY RELIABLY SO YOU CAN START BRINGING OPERATIONAL REQUIREMENTS INTO IT. YOU CAN DO IT REALLY, REALLY FAST. AND NOW YOU CAN CONNECT OTHER TOOLS TO IT AND LEVERAGE FOR APPLICATIONS LIKE THE EYE. AND THEN MACHINE LEARNING, NOW YOU CAN START DOING AI PREDICTIONS, BUILD MODELS THAT CAN PREDICT THE FUTURE FOR YOU. THOSE ARE THE TECHNOLOGIES, AND THE CLOUD IS ESSENTIAL TO WHAT WE DO. THE TECHNOLOGY THEY DEVELOPED IS REALLY IMPORTANT FOR US. WE LEVERAGE THAT TO BE ABLE TO MOVE BETWEEN THE CLOUDS AND FOR US FOR OUR TECHNOLOGY TO WORK YOU NEED LOTS OF DATA. AND THE CLOUD IS THE ONLY PLACE WHERE YOU CAN BUY DATA SETS. YOUR RESULTS ARE NOT GOING TO BE THAT GREAT. YOU CAN BUY DATA SETS FROM OTHER PROVIDERS, AND COMBINE THESE AND GET GREAT RESULTS. THE CLOUD TRANSITION IS ESSENTIAL TO WHAT’S HAPPENING. AND IT’S SOMETHING THAT BINDS US ALL THREE TOGETHER. >>AND THE CLOUD IS A VERY CRITICAL ASPECT. AND DATA IS MOVING THROUGH THE CLOUD. YOU HAD SAY MOST OF THE DATA IS BORN IN THE CLOUD. NOT ON PREMISE. AND THEREFORE AND THE CLOUD A LOT OF OPTIONS OR POSSIBILITIES LIKE ACCESS TO UNLIMITED RESOURCES. NOW YOUR PLATFORM IS A FULL DATA CENTER. A FULL CLOUD REGION. HOW TO USE AND TO LEVERAGE THESE RESOURCES IS. SNOWFLAKE IS A SERVICE THAT, AS MANY WORKLOAD AS YOU WANT. IN TRADITIONALLY, THE CHALLENGE WAS IF YOU WANTED TO PUT ALL YOUR DATA IN A CENTRALIZED PLACE. BEFORE YOU CAN DO DATA DRIVEN DECISIONS, YOU HAVE TO HAVE ACCESS TO THE DATA. YOU ARE TALKING ABOUT GLUT. THE CHALLENGE IS HOW TO STRARLDZ ALL THE DATA. CENTRALIZE ALL THE DATA. IN THE CLOUD YOU CAN HAVE INDEPENDENT RESOURCES. ACCESSING ALL THE SAME DATA AT THE SAME TIME. BUT YOU CAN SKATE. YOU CAN ADD MORE WORKLOADS. SO THE SCALING OF THE CLOUD IS WHAT IS REALLY TRANSFORMATIONAL. THE DATA SHARING, I MEAN, GETTING ALL THE DATA IS CHALLENGING BECAUSE SOMETIMES THIS IS NOT YOUR DATA. YOU NEED DATA WHICH IS NOT YOURS. IT WAS NOT CREATED BY YOUR ENTERPRISE. SO DATA SHARING IS A HUGE ASPECT. THE CLOUD IS ONE SINGLE PLATFORM WHERE YOU CAN SHARE DATA. AND DATA SHARING WE SEE OUR CUSTOMERS, ADOPTING DATA SHARING. THEY SHARE DATA BETWEEN THEM. >>SO WHAT HAS BEEN THE ADAPTATION WITH DATA AMONG OTHER TECHNOLOGIES THAT CORRELATES TO WHAT YOU PROVIDE? I THINK OF DATABASES FOR EXAMPLE. WHAT IS THE TRANSFORMATION THAT RELATES TO THE DATA GLUT AND RELATES TO THE TRANSFORMATION OF THE DATA ITSELF. WHAT ARE YOU SEEING ACROSS THE ENTIRE TECHNOLOGY STACK THAT REPRESENTS THAT? >>WELL, THERE’S PROBABLY MANY THINGS THAT, DIFFERENT FOLKS COME TO MIND. ONE THING THAT I THINK IS INCREDIBLY CRITICAL TODAY IS ALL OF THE THINGS THAT WE’VE BEEN TALKING ABOUT ARE IMPOSSIBLE TO DO WITHOUT AUTOMATION. A THREE STEP THING IS TRANSFORMATION. ONE IS THIS INFRASTRUCTURE BEING ON DEMAND AND BEING FLEXIBLE AND BEING DISTRIBUTED AND AVAILABLE EVERYWHERE AND IN REALTIME. WHEN PEOPLE TALK ABOUT ML AND AI. AND TO BE ABLE TO DO ALL OF THOSE THINGS IN REALTIME. YOU REALLY NEED TO AUTOMATE ALL OF THE PROCESSES THAT HANDLE THE DATA. AND THE APPLICATIONS THEMSELVES. AND ONE OF THE THINGS THAT I THINK WE WERE TALKING ON A DIFFERENT DAY ABOUT THIS. AND I IT’S KIND OF A CRAWL, WALK, RUN WORLD. PEOPLE SOMETIMES WHEN AS FOUNDERS AND PARTICULARLY SOMEBODY WHO IS SELLING KOOL- AID OF EACH OF OUR FLAVORS, WE TEND TO TALK ABOUT A VISION AS IF IT’S HERE NOW. BUT, YOU KNOW, CUSTOMERS ARE MAKING THEIR WAY TO THE VISION. IN TODAY’S WORLD, THEY ARE TRYING TO GET THE PEOPLE AND THE CRUD OUT OF THE SYSTEM SO SOME OF THIS CAN HAPPEN IN REALTIME. AND IN OUR PART OF THE WORLD. THAT’S KIND OF THE ROLE THAT COMMUNITIES HAS PLAYED. IT’S SUCH AN AMAZING TECHNOLOGY IS BECAUSE IT AUTOMATES THE HANDLING OF APPLICATIONS IN A WAY THAT WAS NEVER EVER POSSIBLE BEFORE. YOU WERE TALKING ABOUT STUFF THAT WASN’T POSSIBLE BEFORE. NOW YOU CAN AUTOMATE THOUSANDS AND THOUSANDS OF CONTAINERS BECAUSE GOOGLE WAS DOING IT ON A PROJECT CALLED BORG BEFORE THEY OPEN SOURCED IT. SO SAME WAY WHAT WE’RE FIND SOMETHING THAT IS TRUE FOR DATA. DATA COMES IN ALL TYPES OF FORMS. WE’RE LIVING IN A DISTRIBUTED WORLD. WE HAVE CUSTOMERS WITH SENSOR NETWORKS WITH DISTRIBUTED DATA. AND ALL OF THAT NEEDS TO BE MOVED AND PROVIDING DATA AGILITY REQUIRES THAT IT BE COMPLETELY AUTOMATED. AUTOMATION IS ONE OF THE KEY TECHNOLOGIES THAT ENABLED THAT. >>WHEN YOU’RE THINKING OF HOW PEOPLE ACCESS THAT DATA AND KIND OF THESE NEXT GENERATION OF DATABASES FOR EXAMPLE, THAT ARE CORRELATED TO YOUR TECHNOLOGIES, WHAT DO YOU THINK OF. WHAT TRANSFORMATION ARE YOU SEEING IN THE PROCESSES THAT THE TECHNICAL TEAMS ARE USING? >>OUR VIEW IS BIG ENTERPRISES HAVE LOTS OF DATA IN DIFFERENT PLACES. WE DON’T THINK IT’S FEASIBLE TO ASK THEM TO MOVE IT TO A DIFFERENT PLACE OR CHANGE IT. OUR APPROACH HAS BEEN WE’LL HOOK INTO WHATEVER DATA YOU HAVE. OUR GOAL IS ONCE WE HOOK INTO IT HOW CAN WE DEMOCRATIZE IT SO THE WHOLE ORGANIZATION CAN START ASKING QUESTIONS FROM THE DATA. WE ACTUALLY DON’T CARE. WE’RE AGNOSTIC WHEREVER YOUR DATA LIES. AND WE ALSO LET YOUR MIX IT. YOU CAN HAVE IT IN A TRADITIONAL DATABASE. A MODERN DATABASE LIKE A NO SEQUEL DATABASE. YOU CAN SCRAPE IT OFF THE WEB. THAT’S WHAT SPARK ENABLES. AND WE HAVE A LOT OF DASH FOURS AND REPORTS AND THINGS THAT MAKE IT REALLY EASY FOR PEOPLE. >>VISUALIZATION. >>PEOPLE WHO ARE NOT SUPER TECHNICAL NEED TO BE ABLE TO GET ANSWERS. IF IT’S JUST FOR PEOPLE WHO PROGRAM IT WON’T CHANGE THE WORLD. >>DATABASE IS A VERY INTERESTING CONCEPT. IT HAS BEEN THERE FOR MANY, MANY YEARS. THE NEW AND THERE’S A LOT OF TECHNOLOGY THAT’S BEEN BUILT AROUND DATABASES LIKE THE TOOLS, VICIALTION TOOLS, VISUALIZATION TOOLS. WHEN WE STARTED SNOWFLAKE AND FOUNDED SNOWFLAKE WE WANTED IT TO BE A NEW TYPE OF DATABASE. KEEP THE INTERFACE, THE SEQUEL INTERFACE. TRANSACTION IS VERY IMPORTANT. HOW YOU CHANGE THE DATA. HAVING CONSISTENCY IN THE CHANGE. BEING ABLE TO GO BACK AT ANY POINT IN TIME. IT’S VERY IMPORTANT AND AT THE SAME TIME, TRADITIONAL DATABASE. IF YOU LOOK AT TECHNOLOGY LIKE, THIS TYPE OF TECHNOLOGY, SINGLE CLUSTERS, THEY DON’T KNOW HOW TO DEAL WITH BIG DATA. HAVING A NEW MODERN SYSTEM WAS WHAT WE WANTED TO DO WITH SNOWFLAKE. MORE A DATA PLATFORM THAT HAS ALL THE GOOD ASPECTS OF THE DATABASE, TRANSACTIONS, SEQUEL BUT AT THE SAME TIME THAT WE SCALE AND TAKE ADVANTAGE OF THE CLOUD. AND THAT’S VERY IMPORTANT. YES, YOU DON’T WANT TO FORCE ENTERPRISE. AND THIS IS HARD TO DO. BUT AT THE SAME TIME, DATA SILOS HAVE HURT COMPANIES A LOT OF CUSTOMERS HAVE SILOS AND THEY HAVE NO CONSISTENT VIEWS OF THE CUSTOMERS. IT’S FRAGMENTED AND THEY CANNOT MAKE GOOD DECISIONS WITH DATA THAT LIES EVERYWHERE AND WHICH ARE HARD TO ACCESS. HAVING ONE SINGLE DATA SOURCE, ONE SINGLE DATA PLATFORM THAT CAN SCALE OF COURSE IS REALLY IMPORTANT. >>WE HAVE LESS THAN THREE MINUTES LEFT. AND I WOULD LIKE TO QUICKLY GO ASK EACH OF YOU. TELL ME HOW WHAT YOU’RE TALKING ABOUT IS A GATEWAY. YOU USE MACHINE LEARNING. THIS SEEMS TO BE A FUZZY STAGE. WOULD YOU CITE IT AS THAT OR DO YOU HAVE ANOTHER PERSPECTIVE? >>I THINK WE’RE FIVE YEARS IN TO A COMPLETE REVOLUTION. 60 YEARS WE’VE BEEN TRYING TO DO AI BUT TRYING TO MIMIC HUMAN BRAINS USING LOGIC AND REASONING. WE’RE FIVE YEARS INTO USING STATISTICAL AI. AND JUST SCRATCHING THE SURFACE. I MENTIONED THE DRUGS THAT WERE DEVELOPED. CHRONIC LIVER DISEASE. AMAZING USE CASES AND WE’RE JUST A FEW YEARS IN SO FANTASTIC THINGS WILL HAPPEN IN THE NEXT 5 TO 10 YEARS. >>ABSOLUTELY. I THINK THE ADVENT OF INFRASTRUCTURE WITH AUTOMATION OF APPS AND DATA IS THE PRECURSOR TO BEING ABLE TO APPLY AI TO MASSIVE AMOUNTS OF DATA IN REALTIME. WE’RE GOING TO LIVE IN A REALTIME WORLD. ANYBODY WHO IS NOT GOING TO BE HAVING REALTIME SYSTEMS, THEY’RE GOING TO LOSE. THE FAST ARE GOING TO EAT THE SLOW. AND THE PRECURSOR OF ALL OF THIS. THE PRECURSOR TO HAVING MASSIVE AMOUNTS OF AI BEING APPLIED IN REALTIME. >>I AGREE WITH THAT. I THINK THAT THE FACT THAT YOU HAVE ALL THIS DATA AND YOU CAN MAKE DECISIONS BUT THE HUMAN IS VERY SLOW. SO YOU NEED THE MACHINE TO MAKE SENSE OF THE DATA. AND THIS IS THE STATISTICAL MODEL. SOMETIMES YOU DON’T KNOW WHAT YOU ARE LOOKING FOR AND THE AI IS ABOUT FINDING THE CORRELATION BETWEEN THINGS. A HA. WHEN THE OBVIOUS DIFFERENT LEADS TO THIS OUTCOME. AND FINDING THAT IS CAN BE DONE BY MACHINE MUCH MORE EFFICIENTLY THAN BY A HUMAN BEING. LOOKING AT DATA AND TRYING TO FIND A CORRELATION IS HARD FOR A HUMAN BRAIN. WE HAVE TO SEE. >>WONDERFUL. AND I WANT TO WRAP THIS UP QUICKLY. WE TALKED ABOUT THE APPLICATION LAYER AND HOW AN APPLICATION ARCHITECTURE IS BEING TRANSFORMED BY CONTAINER TECHNOLOGIES, WE TALKED ABOUT THE TRANSFORMATION OF DATA OVERALL. AND I TAKE AWAY FROM YOU THE IDEA THAT WE’RE TALKING ABOUT DATA IN THE CLOUD. I WANT TO THANK YOU ALL FOR PARTICIPATING IN THIS INTERESTING DISCUSSION. THANK YOU. >>THANK YOU SO MUCH. >>THANK YOU. >>WELL, THAT’S A WRAP. THANK YOU EVERYONE WHO CAME. WE APPRECIATE YOU COMING OUT TO THE EVENT. THANKS TO TECH CRUNCH EDITORIAL. THANKS TO THE GREAT EVENT TEAMS FOR PUTTING TOGETHER A TOPNOTCH EVENT. ONE QUICK REMINDER TO LOOK IN YOUR E-MAIL ACCOUNTS LATER TODAY FOR A DISCOUNT CODE TO THE NEXT EVENT HAPPENING OCTOBER 2nd THROUGH THE 4th. WE HAVE AMAZING SPEAKERS LINED UP. YOU WILL ALSO GET FOR COMING HERE WHICH AGAIN WE APPRECIATE, AN ANNUAL SUBSCRIPTION TO EXTRA CRUNCH, FOR $50. IT’S NORMALLY $150 A YEAR. IT FEATURES ORIGINAL RESEARCH, REPORTING, COMMUNITY PERKS, DISCOUNTS TO EVENTS, IT’S GREAT. SO CHECK IT OUT. AND BEFORE WE GO I WANTED TO INTRODUCE YOU TO OUR BOSS ESSENTIALLY. TECH CRUNCH’S COO WHO HAS A FEW WORDS TO SAY. THANK YOU, GUYS. >>>THANK YOU VERY MUCH, CONNIE. THE GREAT SHOW LIKE THIS CAN’T COME OFF WITHOUT TERRIFIC SPONSORS. GIVE ME A MINUTE TO LET ME THANK THEM. S.A.P. WAS THE MAIN UNDERWRITER. AND WE’RE GRATEFUL FOR BRINGING THEIR CEO TO THE SHOW AND CONTRIBUTING ORIGINAL AND INTERESTING PROGRAMMING DESIGNED BY ASP ITSELF. IN ADDITION, WE HAVE SOME OTHER WONDERFUL SPONSORS, OUR SILVER SPONSORS, GET LAB, NODE AND PRICE FX. DEMO PARTNERS, CODE STREAM, RE- PLEX AND SEGMENT. AND THE BAY AREA COUNCIL AND THE NEWS STACK. AND JUST TO REITERATE WHAT CONNIE HAD TO SAY. TECH CRUNCH DISRUPT IS OCTOBER 2-4 IN SAN FRANCISCO. AND AS AN ATTENDEE YOU WILL HAVE ALREADY RECEIVED AN EXPO ONLY PASS WHICH GETS YOU INTO THE EXHIBIT AREA WHERE YOU CAN SEE HUNDREDS OF INTERESTING START-UPS. WE ALSO HAVE SOME ABSOLUTELY AMAZING SPEAKERS, 135 OF THEM IN ALL. AND JUST TO DO A LITTLE NAME DROPPING, BOB VAN. AND CAL HANDERSON. THE CEO OF LOCKHEED MARTIN. EVAN SPEEGLE FROM SNAP SPAT. AND ASHTON KUTCHER FOR THE BATTLEFIELD COMPETITION. YOU MIGHT WANT TO CONSIDER UPGRADING THE EXPO PASSES TO FULL PASSES TO SEE ALL OF THE PROGRAMMING. SO MOST OF ALL WE LOVE THE FACT THAT YOU ALL TURNED OUT. AND WE HOPE YOU FOUND THE SHOW HELPFUL. AND WE HOPE TO SEE YOU AROUND SOME MORE. THANK YOU VERY MUCH. AND SEE YOU SOON.

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