 Live from the Moscone Center in San Francisco, California, it's The Cube at AWS Summit 2015. Okay, welcome back everyone. We are here live in San Francisco at Moscone North. This is The Cube, our flagship program, where we go out to the events and extract the students' noise. I'm John Furrier, the founder of SiliconANG, I'm showing my co-host Mark Farley, blogger, extraordinaire author, network expert guru. Welcome to The Cube. Again, good to have you on. It's been a lot of fun. Mark Olson, SVP GM of Clouds, there's Splunkers on The Cube. Welcome back to The Cube. Great to see you again. Thanks, John. Dot com, your conferences are always great. We love attending you guys. Probably one of the favorite events I love. Service Now and Splunker and Tableau are my three favorite events because they're startups that turned into massively big companies really fast. And it's just great to work with you guys. Great to see you. I'd love to hear that. So what's going on? So what's happening with Splunker? You guys are growing still. Give us the update. Cloud here with Amazon. What's the story here at Sabin? Yeah, we couldn't be more excited with the growth that we're experiencing. I mean, it's really a pull. The market is on fire around Cloud and we are all in with AWS. That's where our Splunk Cloud is being run and hosted and they give us great competitive advantage in getting the market quickly. Lots of excitement. So Splunk is a very large community and in and of itself, Amazon is good. They're all techies, they're all, they're very active. What do you see coming out of your community and how does that relate to the vibe at Amazon? Because the cultures are similar. You have hard charging, engineering culture, work hard, play hard, but real serious, but it's new school born in the Cloud mentality. What is the vibe in the communities of the Splunk and has that relate to this new modern Cloud era? Well, I think what you get is, yeah, just a tight coupling of culture and pace and innovation, agility around what we're both trying to do, which really creates a strategic partnership for us. Again, we couldn't be more excited with the acceleration that AWS gives our business. But what we see is we see a lot of customers and even Andy this morning, talked about some common customers of ours, FINRA, Major League Baseball, Intuit, common customers that are moving workloads. It's a journey to the Cloud, they're moving workloads to the Cloud and Splunk's a key part of the service assurance and security and compliance of those workloads. And for the folks that aren't up to speed on the Cloud relationship with Amazon, just detail that out real quickly. Yeah, well, so there's a number of factors. So Splunk Cloud, which is our solution where we run Splunk on behalf of our customers. And of course, we're running that at AWS. We also have a number of customers, some of them I just mentioned, who are licensing Splunk and they're running it on their own in AWS. So there's kind of a bring your own license, bring your own Splunk to AWS, either one. Right, and then we're in the marketplace. We also have Punk, which is offered by the hour on AWS in the marketplace. So there's lots of touch points. So multiple ways to get the goodness of Splunk. All right, so I've got to ask you, what do you think about the machine learning announcement today? Machine learning as a service, all this good stuff coming on. That's one of the many highlights. What's your take on that? Because that's your wheelhouse. I mean, like the Splunk data machine spinning, exhausted the gold has been your... We love hearing about that. Because again, it's a compliment to what Splunk does. Splunk really effectively in real time. Data in flight, can index that data, make it very effective to search and analyze and report on that data. And machine learning is one component. So you layer on machine learning to run against that data that's really been effectively indexed in flight. That's a great match. And there's lots of different use cases that can come out of machine learning. And taking data that's been ingested into Splunk, now what data do you correlate that with? What data do you run the machine learning algorithms against? It's not just... You can look for anomalies and patterns within the data itself, but then there's real power in correlating that to other sources of data. So Amazon talks about enablement and whatnot. So one of the things I like about the Splunk message at your conference is data driven is a big part of your DNA. So these guys are trying to enable more of that. So what are the challenges for the customer? I'm the customer, I'm like, I love the value proposition from weeks to hours in terms of getting that machine learning, some of the big data analytics. But what does it mean for them? I mean, because now they want to be data driven. How do they stitch it together? Now what do you guys do to help customers do that? What specifically are the challenges? How does someone roll out the solution? And how do they get it up and running scaling? Right, I think we're breaking down a lot of those challenges. Some customers are choosing, so you think about domain expertise and there's domain expertise in running Splunk. And some customers have that and want that, great. If they don't, then Splunk Cloud is certainly an option for them where we take that off of their hands. And then they start to focus more of their cycles on more of the reporting and analysis, the visualization, the algorithms, the data modeling, all of that that's running on top of Splunk. And there's plenty of options to make that easier. We've got a slew of partners that help accelerate that and add value at that layer. Splunk itself, we've got services that really help customers do that. So no, we're definitely working to break down any of the barriers and headwinds that may be in play there. So one of the questions that came up on the crowd chat earlier, respect to Splunk, and this came up a little bit at Splunk Live, and a couple of Splunk Lives ago was, when we're interested to see if Splunk effectively moves beyond IT operations focus. Now, is that just a branding that you guys have taken on? Is that where you're, I mean, you do a lot of work in that area, IT Ops is an area, but what's different outside of Ops? Where have you guys been successful and where are you guys pushing beyond the Ops piece? You know, there's always a start. There's always a wedge. And certainly, IT operations has been our sweet spot, application delivery is a sweet spot. Security is a big part of our business now. In our last earnings call, we talked about security being 40% of our overall business. 40%. Yeah, so this is, talked about security use cases being 40% of our business. That thing that's definitely broken. Yeah, they're working on fixing it. I almost dropped an F bomb, but I tell back on the last segment around security. The security's broken right now. It's breaking down all over the place. You know, where Splunk really adds value there is we can aggregate any data source without any of the upfront modeling that you need to. You don't have to put it all in rows and columns. So you just identify the data source, you throw it into Splunk, we're indexing it. Now you've got aggregation. Now you've got correlation across these data sources to detect breaches. So there's significant value being added there. And then beyond that, you've got business analytics, you've got internet of things that we're moving into. And there's always some interesting use cases around that. At Splunk Live, you end up hearing a lot about those use cases. You know, customers coming forward and talking about interesting things that they've done. You know, New York air brake was one interesting internet of things, you know, use case that is on our website where, you know, they create a lot of cost savings in fuel just around being able to in real time monitor the braking speed and acceleration of trains. So. Mark, you were here, but we coined the new term at the last Splunk event. Calling BS before Splunk. BS is the first. That's clever. That's very clever. BS before Splunk. They have a common, this is not a joke. They were driving in the dark. They didn't have it either. Yeah, that's what Joe said. It was the time that was before Splunk. And that was a different world than after. So, you know, accomplished. You guys have done a good job. You have a huge passionate user base. But now, thinking of the next level of security, I talked with one of your guests, Gary Nicula. FNRA. Yes. He said there's two types of companies. Those get hacked by China. And those who don't know they've been hacked by China. So you're talking about security. So what is the security competition? Amazon's got CloudTrail enabled faster now. There's a lot of compliance stuff and chances of messaging today. That's a big issue. How do your customers deal with this whole compliance issue and security? Yeah. And you know, they're related, but they're still, you know, different, different paths. I think around security, it is so much more detection right now, right? That you are going to get breached. But how do you mitigate the damage of that breach? How quickly do you detect the issue? How quickly can you remediate the issue? And again, by pulling in all sources, aggregating a lot of data sources, being able to correlate across them, helps, you know, accelerate that breach detection. Compliancy is really around the audits and the trail. So for us, you know, we have a Splunk app for AWS, which automates the ingestion of logs coming from CloudTrail, coming from config. And now you're creating visibility to, you know, who's doing what, who's logging in where, what resources are they accessing, being able to look at that and, you know, look for anomalies, you know, look for any outliers, look for something that doesn't look ordinary and be able to follow up on that. I would think there would be more opportunities for additional apps besides CloudTrail and config too. Are you, what else are you working on? Or do you see a business expansion just in the Amazon part of your business with the ability to take all of this information and index that? Yeah, so that's, there is obviously a big chunk of business around that, from just the workloads that customers are moving to Amazon, to AWS or to the cloud, then those, sorry, then those workloads are generating all of, you know, this machine data and log data. But what we see as a really big play is what we would refer to as cloud or SaaS data sources. So basically workloads in the cloud and it could be Salesforce, could be ServiceNow, workloads like that, certainly, you know, AWS as well. And being able to aggregate that data and look at it from a compliance standpoint, from a performance standpoint, reliability standpoint, all of those things. And it's also really, we think of it as, it's kind of a cloud to cloud closed loop, right? So the data is already in the cloud. So customers have already got, you know, have sort of overcome any concerns they may have had with that data being in the cloud. It's originating in the cloud. So then why try to back call that all on premise, right? Just make sense to now move that to something like Splunk Cloud and then be able to. How do you guys dance with Amazon, in terms of marketplace? I mean, I mean, I was talking to a VC, big time VC in this week, last Monday on a crowded crowd chat. And they said, we don't invest in companies that play in the white spaces of Amazon. I'm not saying Splunk's the white space, you're a public company, but you guys have a big business, but Amazon could come in there and do some stuff. He's seen some machine learning in there. How do you guys going to stay ahead of the competition, whether I know Amazon's not saying they're competing with you, but you know, you got to put the strategy hat on saying, look, you got to increase your margins. It's hard to raise prices, right? So you got to introduce new, new stuff. You have competitors on the low end, new starts emerging. What, how do you guys do that? How do you dance with Amazon and differentiate and add new products? What's your, what's your plans there? I think there's a couple of things. One, you know, we continue to mature our solutions, solutions that run on top of the Splunk platform or Splunk engine when you look at it that way. And IT operations, app delivery, security, you know, are some of those solutions that we're running on top of. So, you know, we have over 600 apps in the ecosystem that are all really running on the Splunk platform. And as those mature and, and fill out, you know, that's a, that's a big area of growth for us. It seems to me you harden on top of Amazon because you want as much compute as you can. Let the customers choose, right? Right, right. But you have a nice harden top and then build on top of. But it's, you know, it's a very strategic relationship that we have with AWS. We're thrilled with that. Like I said, we're happy to be all in. And we really add significant value when, so another perspective, another way to look at this is our customers are thinking about, well, every customer is a cloud strategy. Now, no matter who they are, even if they're a financial institution, they have a cloud strategy. May not be to move it to AWS, but they have a cloud strategy. For all the ones that are comfortable with a public cloud or they're comfortable moving some of their workloads to the public cloud, well, you think, how do they get that level of comfort? So one way is they want to know that that workload, once they move it, to the cloud is going to be as secure, as reliable and in performing similar or better than it was on-prem. Well, Splunk is a mechanism to doing that, right? So Splunk can confirm the security and the performance of those workloads as they move. So in some ways, Splunk is an enabler of workloads moving to AWS and giving a customer the confidence to move it. Well, it's interesting, right? You mentioned the word enabler. Jassy loves that word, but he has the same challenge because you're both platforms. His enabling high watermark, the minute he goes over that, he's in the solutions business that's out of his comfort level of his cadence of adding new stuff, right? I call it Jassy's Law. More features, more features added on and on. So that's his goal. The minute he tries to go in and stand a little bit, then he gets a little bit off track. So I don't see them competing. That's my perspective. But your challenge is, okay, great. Let them enable me, Splunk, sell more stuff, put it everywhere, and then you then enable on top of that. Yeah, I think there's more application. There's absolutely a strong coexistence around enablement. Yeah, yeah. As the security's hot now, so security, what else binds security? Yeah, so you've got the blocking and tackling around IT operations, application delivery, security, and now you start to look at a lot of the business analytics and internet of things use cases that we can address, yeah. How's the business model change between on-prem and in Amazon? Are there different ways that you license or how does somebody pay for this? It's different. Yeah, so now, again, we really strongly believe in customer choice and in giving customers the flexibility to buy the way they want. So we have perpetual and subscription licenses. We actually had that before our Splunk Cloud solution. So we launched Splunk Cloud in October of 13. But even before that, we had perpetual and subscription licensing. So it's flexibility for our customers. They can kind of go either way. We also have a hybrid solution. So, which means customers can actually deploy Splunk on-prem and Splunk Cloud at the same time. And when you think about that journey to the cloud, so they've got some workloads on-prem, some workloads in the cloud. You know, it's not like they flip a light switch and overnight everything has moved to the cloud. So there's a really good use case around these workloads running in both places. And then we can set it up so that for the user, when they do a search, they don't have to know where the data is. Right, so you've got data that's generated on-prem, you've got data that's generated on a cloud app. You know, so you've got the ability to correlate between that and gain intelligence from that. And it's completely seamless to the user, so, yeah. So what's the update on Splunk? I love going to your offices. It seems like they're busting out everywhere. What's the update on Headcount? You're in San Francisco, any new offices into international news. What's the company update? Yeah, well, you know, fresh off the most recent earnings call. You know, we've got 1,400 employees and we grew revenues by 50% from 2013 to 2014. And, you know, we're, again, thrilled with where we're at. Obviously, there's tremendous interest in the cloud and we feel we're really getting pulled there. And, you know, our charter is to really have a cloud solution that meets our customers' needs as they spin up their cloud strategy. And any new product decisions coming down that we haven't heard, new announcements, what's changed since the dot-com? Any future plans you want to disclose? Yeah, exactly. What's changed since October? Yeah, well, you know, one thing that God-free Sullivan, you know, our CEO has been talking a lot about is our market groups. And getting a market group focus, which is solutions focus. It's what I talked about, you know, extending beyond the platform. And we have a security markets group being led by High End Song. We've got an IT markets group now that's being led by Rick Fitz. Of course, we've got our cloud business and we are going to be forming a markets group around business analytics as well. So that's something that we've been talking about. It's going to be in the works in 2015. And, again, we're excited about the solutions that we can build around that domain. So do you expect that to be vertically focused? Business analytics, you know, maybe one for our bioinformatics. They've already got a bunch, but, you know, different segments of the industry. We definitely see the internet of things being very vertical oriented. You know, that's when you think about the use cases around internet of things that we've done so far. Our customers have actually done on their own with Splunk pretty vertical focused. Yeah, you're a home run for internet of things. I mean, data exhaust, as it's been called, which you could argue probes or any kind of devices thrown off data just thrown into Splunk, right? I mean, that's been, that's a hot market. You've got to be honest. I mean, for us, for our Splunk cloud business, it's been very horizontal. We're cutting across a bunch of verticals. And also, if you think about customer size, you know, we have small, tiny customers and we've got very large scale customers that are sending us over, you know, multi-terabytes of data per day. So I've got to ask you, what's your take on the whole startup scene? SaaS business models are exploding. You guys are a great example. I mentioned ServiceNow and TableLog, Land and Expand, highly leveraged models, indirect sales, low cost broader, all that great stuff in the economics of SaaS. As you get bigger, you've got to build on that. But for smaller companies, there's a way to get into the market, get fast. How do you view that market and what's your advice to entrepreneurs out there pricing, how to be successful? You guys have been there. What's the secret formula for getting in and doing the SaaS game? Because, you know, there's a lot of born in the cloud side, certainly on Amazon. You know, for us right now, at the phase that we're in again, we're getting pulled. You know, we're not having to create a market and the interest in the cloud, we're not even going to create that either. If you look back maybe 10 or 15 years ago, when Salesforce was entering the market, they were creating demand around the cloud and a cloud-based solution. And we're now beyond that. We've shifted out. So now it's more having the right solution that meets that demand, that satisfies what the customer's looking for and absolutely the right economics around it. I mean, I would say that customers, when they come to us and start talking about the cloud or they want a cloud solution, they're not asking us, oh, well, what's your infrastructure look like? What's your architecture look like? That's why they want to go cloud. They're not interested in that. They're fine for that to be behind the curtain. That's for us to figure out. But it's got to drive the right value, the right innovation, the right economics for them. Great. My final question is we're getting the time hook here. What's the most exciting thing about Amazon right now from your personal perspective or splunk perspective, your choice? Given their buffet of goodness, of constantly announcing new stuff, what gets you excited? What do you say, hey, that's really cool right there. That's a real big, big winner. Well, I think actually that's it. It's not that it's any one specific thing, but just innovation. Again, AWS and innovation to me just go hand in hand. They're constantly announcing new stuff, which creates agility for us and speed for us and enables us to deliver our solution more effectively. And so we pass that down to our customers. When we were looking at an infrastructure as a service partner to get on board with, obviously AWS is a clear choice. They're the 800 pound gorilla. They've got a dominant share of the market, but they earned it. And I think they earned it through innovation, so. Awesome. Okay, Mark, thanks for coming on theCUBE. Mark Wilson with Splunk, it's my PGM of the cloud business with Splunk. Check out Splunk Live. Always got some good stuff going on there. Hashtag Splunk Live. Also this is theCUBE here live in Moscone in San Francisco. We'll be right back after this short break. I'll be right back with our next guest.