 Okay, we're back live here in San Francisco. This is the CUBE Silicon Angles flagship program. We go out to the events, extract the signal from the noise. We're here with General EEs Industrial Cloud event in San Francisco. I'm John Furrier, the founder of Silicon Angles. I'm joined by my co-host. I'm Dave Vellante of Wikibon.org. Leo Spiegel is here. He's the Senior Vice President of Strategy and Corporate Development at Pivotal. Leo, welcome to theCUBE. Thanks for coming on. Thanks. That's an interesting title given the dynamics of what's happened with Pivotal. I mean, obviously, we've been following the evolution. You know, it's our fourth season of theCUBE and we've been at every EMC world. We've been at every VM world since. And just the evolution of Paul Merritt's vision has transformed the industry and people are making moves. And you were involved kind of behind the curtain, you know, pushing buttons for the Pivotal spin-out or what are they called, spin-out? Or was it? Well, initially it was the initiative. The initiative. Yeah, now we're a independent company. And you've been involved in some of the M&A side and kind of putting those ingredients together. So tell us a little bit about that and then connect it to where we are today because now GE comes into the picture, which you were also involved in that relationship. So can some of us see the dots connecting? Yeah, well, you know, first I have such admiration and respect for Paul and for Joe Tucci and guys like David Goulden. I mean, I think they really have a vision of where the market's going. And when they acquired Green Plum, I think they really understood that, you know, the world was going to go way beyond just sort of storage and that you really needed to enable the whole vertical solution up to the application. And so we've been on this journey. I mean, that's sort of where I got involved because I was the original investor in Green Plum and I always joke Scott Yarra, I was his first boss and I've worked very closely. I hired Bill Cook, who is now the COO of Pivotal. So I've worked in and around the company for a very long time. And when we became part of EMC, you know, we realized that we needed to expand our capabilities. And so I think a really pivotal, no pun intended acquisition we made was the acquisition of Pivotal Labs. And Labs really enabled us to, you know, have the people who could build solutions on top of our database platform. And then as you know, you know, mid last year inside of EMC and VMware with really Paul's vision, we decided to create Pivotal. And, you know, Pivotal was a combination of assets that came from EMC and VMware. And we launched the company April 1st of this year. It was a very complicated transaction just quickly because, you know, these assets all had to be valued fairly. They had to be put into an entity. We had to move employees all over the world. And so it's, there was a lot of stuff, a lot of hard work. Figuring out what goes where. We had to price it and do it fairly and lots of bankers and lawyers. A lot of people were fun. A lot of fun. As Dave said, there's one lawyer and no one's making any money. There's two. Everyone's wealthy. There's a lot of fees. Absolutely, a lot of fees. But in general, the employees are very happy. There's no real negative sentiment amongst the employee base. You got options on both companies. You guys really did a big startup move there. It was great. So given your perspective, obviously, you know, your history with Sandpiper in the early days of the web, you had to build out the plumbing back then. That was the early days of the stack. We were referring to some of this industrial internet or industrial cloud as 1991. Like we're in the early 90s and we're arguing over, you know, 802. whatever or Token Ring, Ethernet and the stack above us is unconquered yet. Or the information is super high where that was predating the web. So we're in that kind of mode now with this GE thing. So how do you view that? Because you have a perspective of the history and doing the corp dev. You got to be plugged into that 20 mile stare. So share with us this industrial revolution around the industrial cloud. So you know, it's, you know, I think it really, for me, it started with the sensors, right? I mean, I think if you think about what's been happening in the industrial world, you know, you started with these devices, whether it was a jet engine or a turbine and then you were able to add these sensors onto these devices and then, you know, these sensors, it's sort of like ET. They started to report home, right? And all of a sudden, you know, you need a platform where you're going to get all this information from these sensors and devices and do things, you know, whether it's figure out a jet engine's not happy or, you know, figure out how to optimize a power plant. And so in a lot of ways, you know, I think the ironic thing for me at least is that it was sort of the consumer companies that proved scale, right? So I think we all understood that you could collect this data. But I think the real challenge was, could you build a platform that could keep up with the velocity of data? And could you make, you know, real-time decisions that could really enable businesses to do things like shut down a power plant if there's a problem or take a jet out of, you know, sort of a flight or whatever because it had a problem. And I think really with the proof from, you know, companies like Google and Facebook and others and the work that, you know, really we've done at Pivot all around, you know, our database technologies and our Hadoop technologies and the analytics we've built on top of it. You know, I think all those things have come together to really give companies like GE, you know, the conviction to really take to market a next generation of applications. And, you know, I was just up at lunch here at this event talking with some of the GE customers. And I mean, they're a sight. I mean, you know, for them, this is real dollar. It's a modernization. It's like modernizing the baseball fields. Like, you know, the old Park in San Francisco, now you've got the revitalization. Yeah, I mean, I think they think they can dramatically change their business models. And, you know, we've all seen these trends, right? From to your point, Token Ring versus Ethernet or, you know, the mini and the mainframe. I mean, we're at that point now. It's really exciting, I think. It's like it's back to your green-plum investment because back then, there was no such thing as big data. At least nobody called it that. So, and essentially, what? Was it the early part, middle part of the last decade? Really, right? So, you've got this sort of new type of database. Did you have any inkling that it would become, you know, insert itself into this new data trend? I mean, obviously, you saw data is up and to the right, but talk about that a little bit. What was your idea? Some day over a beer, I'll tell you the long and interesting story about green-plum. Like all startups, it wasn't anywhere near linear. But, you know, when Scott came to us and said, look, you know, the world is changing and the amount of data that people are creating is mind-boggling and, you know, people are tired of the forklift mentality of databases. You know, like, you know, buy TeraData, you know, spend tens of millions of dollars, spend millions of dollars a year on maintenance. You know, I have a way to do that software only and really, you know, have better performance and just unbelievable cost advantage. I mean, you know, we really saw that as a big, big opportunity. And, you know, like everything in the venture business, you're betting on people. And so we had a lot of faith in Scott and Luke Longran and, you know, and some of the technologists behind it. But for me, you know, I did see it as the beginning of a long evolution because I think what's different today, at least, you know, I'm, I was joking. I started in my first company when I was in college. You know, I was in the system integration business. I automated Morgan Stanley and Merrill Lynch and, you know, put in Windows systems and, you know, back many, many years ago. NT or, I started with Novel and then went to NT and, you know, and, you know, I went back to Novel again. Yeah, I remember synoptics and all, you guys know, right? So, I mean. Frank Cartaglia would be proud. Exactly. But the thing that's different today or was changing back then, and we see today was the importance of the data, right? It used to be everyone focused on, like the application logic. Like, you know, could I do an expense report or could I build a general ledger? But what was happening at the beginning of Green Plum was really like, what does this data mean and what can I do with it? And that's really kind of the vision and the road we've been on. And I think with technologies, you know, like Hadoop and, you know, Gemfire and Sequelfire for real time, with all these technologies coming together in our platform, you know, I do think we're uniquely positioned to help companies really take advantage of the meaning of their data and translate that into real value in their business model. And it seems like we're entering this new phase which is what does this data mean and how can I act on it in real time with machines? Yeah. And that, what we heard today is a whole new wave of value creation that's coming. That's got to be exciting. Yeah, really exciting. I mean, you know, when we had the, you know, one of the first technical diligence meetings with GE, we can talk a little bit about that transaction. But, you know, you can imagine kind of our geek heads and the GE geek heads getting together. And, you know, Paul was there who, I always joke, is the ultimate geek head. And, you know, they're all talking about just the number of transactions and the velocity and, you know, kind of looking in our eyes and saying, can you really do it? I mean, can you really build systems at this scale? Because that's the unique thing about the GE solution is, I mean, the amount of data and the velocity of the data. I mean, it may be different than the amount of data that a Google accumulates over a long period of time, but the decisions one needs to make instantaneously on that velocity of data is a really unique solution that we think is going to be exciting to build. So let's talk about the deal. Because you guys, you know, again, you got to love Tucci and Goulden and Merritt, spinning out this new company. You've got, you know, they put forth at the financial analyst meeting, hey, at some point we'd like to do an IPO, we've got a lot of work to do, but market went crazy that day in a down day, by the way. And so here you have GE, you know, the industrial company saying, well, we want in. And now you've announced that you'll do $300 million roughly this year with Pivotal. So, you know, three X revenue valuation, that's pretty conservative, believe it or not, in this day and age and this day of the big data bubble. So that's pretty good valuation for GE. Yeah, I mean, I mean, basically, you know, without going into all the gory details, I mean, we know- Well, we were speculating. You know, we did a, you know, a valuation. And, you know, we valued all those assets, put them into Pivotal. And, you know, I think that, you know, you know, EMC to their credit was very focused on doing the right thing for all shareholders. Because as we know, EMC owns 80% of VMware. So there are other minority shareholders. So, you know, I think it was really done, you know, to create value for everybody. And, you know, the GE opportunity and GE as a partner for us is so strategic that in effect they invested at the same valuation that EMC continues to invest in and VMware continues to invest in. Right, well, so I used to call them misfit toys when they were part of VMware and EMC. Pat Gelsinger doesn't like when I say that, but nonetheless, it sort of didn't really fit. Talk about how they do fit now in Pivotal, whether it's Cloud Foundry or Green Plum or Pivotal Labs, CEDIS, I mean, interesting collection. Yeah, so I mean, so basically the key set of technologies that came together to create Pivotal obviously came from EMC and came from VMware. On the EMC side, you know, it was primarily Green Plum and it was Pivotal Labs. And then, you know, we made a very small acquisition late last year called more VRP from a company in Israel, which is a console technology management technology. On the VMware side, you know, it was Cloud Foundry, it was all the V-fabric spring technologies. It was CEDIS, which is an analytics framework. And so, what was the company you mentioned just from Israel? More VRP. That was on the EMC, did they? That was on the EMC side, yeah. So that's still in the Viper, right? Powering a lot of the Viper stuff. It's actually working on our, it's really... Oh, okay, Pivotal. Yeah, it's powering the Green Plum database. So, one of the things we wanted to do was they have very unique technology that allows you real time to manage the database. So, if your memory allocation's not right or you have storage resource allocation issues, the more VRP technology on the fly will change that resource to ensure the system operates at peak performance. So, those were the, and it was a relatively small acquisition, so those were the, sort of the assets from the EMC side, and again, on the VMware side, it was the Cloud Foundry technology, V-fabric spring technologies, the Gemfire SQL technologies, and then the CEDIS technologies. And so, pulling all those technologies together and sort of building the team and moving the employees was really the exercise that we went through. And that comprises the Pivotal platform. Yes, and so with the genius of Scott Yarra and Paul Moritz and Rob Me and a whole bunch of amazing, I mean, we have just an amazing bench, as you know, of talented engineers, and so I think we're very blessed. But we've now announced Pivotal One, which is a framework which takes all those technologies and will provide to the customer a uniform way to acquire the technology. And it's very much, as you'd expect, a core set of technologies with sort of the data component to it, and then the PAS platform as a service component for building applications. And then we'll enable a set of services on top of it, and we're talking to a variety of companies who, you know, in effect want to use that platform to build services on top of it. And so we think we can be that layer, if you will, above the cloud. And as you know, one of the things that we think is really important is choice. And so we're sort of cloud agnostic. So, you know, we'll work with Amazon and we'll work with OpenStack and we'll work with a variety of cloud platforms. And the customer can move their application from cloud to cloud by using our layer in between, basically. We are impressed with EMC and VMware, you know, Joe Tucci, Gould, we've interviewed all of them. And you got on the Moritz side, Gelsinger. I mean, these guys are awesome. They know their tech and their geeks and their alpha geeks. But one thing that really impresses me, the most of all, just, that's just cool. But what's really impressive is that they are great at go-to-market and they're great at competing, right? So they're very customer-centric. So I got to ask you to go-to-market with GE. I mean, it's a good deal. They pay $100 million. You get a market lift. 105. Okay. But who's counting? Well, count the fees. 105. Yeah, and they get a nice deal because they get a good position. And you guys kind of... They have 10% of the company. Evaluation is low, given what they could be, given the built-in revenue run rate. Sure. And you got a great team. So team, product, market fit. But they open up that world for you. So obviously, from a biz dev standpoint, corporate development, you have a new market space. How are they attacking that? Are they going to go... Total partnership with GE? Is there going to be any derivative products? Joint products? How is that relationship going to evolve? So, you know, we'll be announced over the coming months, so I'm not going to pre-announce anything. But at a high level... You're smiling. Joint products. But at a high level, I mean, I think we're very committed to deep technology integration and deep go-to-market integration. And it'll be leveraging GE resources on the go-to-market side with pivotal resources, with EMC resources, and VMware resources. And today, you can imagine that GE is a large customer to EMC, a large customer to VMware, and a large customer to Pivotal. And so we'll continue to leverage all those relationships. But I think what's exciting is that it's transformed itself from what you'd consider a customer relationship to really a partner relationship. And they'll leverage our platform in there, which is really what Bill Rue talked about today, is they're going to leverage our platform as a core piece of the solutions or products they take to market. And you guys, as early adopters, I want to say early adopters, but it's an emerging market, is what Pivotal's doing. It's essentially the top of the stack of VMware kind of put out and focused. I mean, to me, we've always loved Maritz's original vision in 2010, when we had theCUBE there. The top of the stack was all playing out, but you had all too much stuff going on in the middle of the data layer. So this is essentially a spin out, but it's still emerging. So you have a go-to-market emerging deal with GE. So I think, one, that's compelling. And it gives you guys thought leadership, because the Internet of Things has been kind of kicked around since 2001 when wireless probes were sitting in the network. But since then, you're seeing the sensors, the probes, now moving into the industry. So it's a complete early game. So how are you guys going to organize internally, given that there might be a new partner out there? Are you exclusive to GE? You have potentially other partners? Yeah, I mean, there's no exclusivity in our relationship either way. I mean, GE will partner with the companies that it needs to partner with to be successful and Pivotal will do the same. I mean, we have lots of companies in the industrial space who work with EMC and VMware and Pivotal, and we'll continue to work with them. I think if you heard today's session, a lot was talked about around standards and open source. And if this thing is as big as it can be, and if we make it as big as it should be, we're going to have to all embrace co-opetition. And that's kind of how we've grown this industry. You guys have been in it a long time, right? You just can't be sort of stuck with one. You've been very entrepreneurial. So I got to ask you the entrepreneurial question. There's a lot of entrepreneurs out there watching and we'll watch the reruns and read the blog posts and the research. They want to know where the white spaces are. So enable them, point them, give some navigation around where they should be focusing. If I'm a developer, I'm an entrepreneur, internet of things, industrial cloud, and just commercial enterprise open source, where's the white space? Well, what keeps me excited, I mean, one of the dimensions is you think about it. I mean, the number of mobile devices relative to laptops, right? I mean, they're growing exponentially. So I think anything in and around mobile and mobile in the enterprise is really exciting. I mean, I just look at how today, even at EMC, how easy it is for me to integrate my iPhone into the EMC system, right? And it's just beginning. So I think that's a great area for entrepreneurs to focus on is mobile. I still think there's a lot to do around the heavy duty manipulation and crunching of data. So I think there's some interesting areas there that entrepreneurs can sort of focus on. And then the applications, right? I mean, I was at lunch and it's sort of funny. I mean, I don't know, if you were starting a company today, would you buy an ERP system, right? I mean, would you buy an HR system? Or would you just use- Would you buy Oracle? Yeah. I mean, I think those are the fundamental questions, right? I mean, I think if you were doing it today, you'd use a SaaS-based HR system. You'd use a SaaS-based ERP system. So I mean, that goes forever, right? I mean, there are so many applications that I think people can jump on. And it makes perfect sense. I mean, why own it when you can use it and have someone else manage it and operate it? I mean, it's, you know, you focus on your core competency. So it's sort of like that whole outsourcing thing we lived through in the past, but it's just happening at the application layer now. What's the capital markets like in Silicon Valley right now or in the VC world, early stage kind of, and then growth companies? Is it robust? Is it bubbly? Is it constricting? What do you see? It's bumpy. I mean, I think early stage is tough. I mean, I think, I mean, it's kind of interesting, the hyper, hyper early, you know, sort of all of these incubators, you know, going out and getting 50 grand or 250,000, no problem. You know, closing a five or eight or $9 million series A tough, you know, I think B rounds even tougher. But I think if you can get to a scalable business model and you can demonstrate traction, unlimited money. So where the market is hot right now is on the late stage and on the really, really, really early stage, but the middle is challenging. So you have that proof point. So, you know, one of the things that you guys do here in this panel I tweeted about and also mentioned when Bill was on was, you know, it's all about, you know, all the buzz around emerging, futuristic, very tech-involved, Paul Moritz, Werner on there, I mean, he gets the rock stars. But you know, the word business value was like popped right in the center there. So, you know, any startup that can get business value quick, but that's the promise of the cloud. That's what you guys are trying to set up with Bivital. Yeah, well, you know what's so funny is when I started as a venture guy 12 years ago, conventional wisdom was if you're gonna build a software company, you need like $30 million, right? So you just run the math and you save yourself $30 million. I mean, what do you have to sell that company for for a VC to get a 10X, right? I mean, you have to sell that company, you know, for, I mean, you know, $200 million or something. You know what I mean? How many companies sell for 200 million or more? So, I mean, today, the beauty of it is I think you can do that same thing for a third the cost. I mean, probably for $10 million, you can build a very sophisticated software company. And sell for a billion. And sell for a billion. There you go. Can I get in on it? I want to get in on that deal. Yeah, we have a fucking deal. You didn't do the NYSERA deal? Well, sorry, the deals app, we have a great pipeline right now. So, we were talking earlier about it. I love it. The deal flow, the cube. We're turning into an M&A machine, too. Exactly. Well, I am a deal junkie. So we're talking earlier about how you guys brought these assets together. What I loved about the Pivotal deal is when we first heard about the Pivotal initiative, it was like, okay, another big data platform and Palmer is behind it. So that's a plus. But when you announced the GE component of it, then the light bulbs went off because really nobody was hardcore talking about that next wave. All right, so with all these pieces together and with the GE announcement and given your corp dev role, how much of your activity in new investments goes toward that industrial internet versus the old sort of make-a-dupe-enterprise-ready type of thing. Can you talk about that a little bit? I think we're going to have to invest in a variety of areas. I mean, we're clearly committed to GE and committed to this industrial internet and a lot of our engineering and work right now is focused on that. But at the same time, we have customers and telecommunications. We have customers that are in the internet. We have financial services. So I mean, at the end of the day, if you're a platform company, you have to be able to support all the key markets. And so we have to kind of invest across all of them. And one of the things we're spending a lot of time working on at Pivotal is figuring out who the key companies are in those verticals and talking to them about leveraging our platform, giving them the value proposition about why they don't need to build out this infrastructure. They can use our infrastructure. They can build the logic for their application and we can go to market together. So I think you'll see us with a variety of relationships, maybe not as deep as GE, but certainly many relationships in a set of key verticals to demonstrate the value of the Pivotal One platform. So you talked about the capital markets, the sentiment right now. I presume your criteria are somewhat different. Maybe you're looking for guys who can't market or can't sell and don't have traction but have great tech, but maybe talk about that a little bit. What do you look for in investment? Well, I mean, we invest basically through EMC Ventures. And so EMC Ventures has got, like all sort of strategic venture groups has that dual responsibility of investing in things that are strategic to the core businesses, which is obviously EMC and Pivotal and to some degree VMware. And then also obviously, it has to be a good financial return because at the end of the day- Are you in EMC Ventures? Or you have Mission Ventures, right? Wasn't that your- Yeah, Mission Ventures is the venture fund that I'm currently a partner of, but we're kind of, I've joined basically Pivotal. So in my Pivotal role, if we do investments, we'll do those investments. You tapped that through EMC Ventures. EMC Ventures. And Mission is not making new investments. Got it, okay, got it. So basically it's really, new investments would be done in partnership What's the small steal you've done just from a strategic? You see something strategic, how low have you gone? In terms of EMC Ventures, they've invested half a million dollars. They've invested up to tens of millions of dollars. So it's sort of the gamut. If it's strategic, they can go for it, get a look at it, keep looking. Do they lead or just mostly follow? I mean, they've led some, but they do very much like to work with traditional venture guys because they obviously have a limited number of resources. And so working with sort of a local venture person is the preferred path. And so, and they're very active. I mean, you make decisions at EMC, you refer. We basically, at the end of the day, They're the Intel Capital guy there from. Yeah, so Scott Darling is a very good friend. It's kind of funny, we've known each other for a long time. And you know, he'd be a great guy, by the way, to have on the queue because he's just grown his team substantially. So he's got now five really experienced VCs who are working with him and they're aggressively going to market. They're still on Calpher and Palo Alto. Yep, they're still on Calpher and Palo Alto. We'll have to come down and do a video. Come down and do it with Scott. Scott Darling, if you're watching or anyone knows Scott, ping them, we're coming down there right now. Awesome guy. But we work very closely with them. At the end of the day, they make the decision as a partnership, but they're influenced by the business units like Pivotal or EMC, et cetera. Well, you identify the need too. The white space that you have, Joe calls them tuck-ins, right? You guys are big on tuck-ins. I think it's really underscored some of the prowess that you guys have in acquisitions. I mean, you guys, IBM, Oracle, top three in the enterprise tech business. Yeah, and Joe and David Goulden, I mean, they're in Paul and Pat. They're all really good at keeping the people, right? No, they're there, phenomenon execution. Look at Scott Yara still here. Bill Cook is still here. Rob Mee is here. I mean, you guys know the EMC. I mean, they've done a great job. They've built a culture that's really about exceeding customers' expectations. They treat their employees great. They reward the executives we call tech athletes, and that's why they stay because the environment's conducive for execution. They're great. So if the people who were performed stay because they get that emotional benefit. Well, I think they're winners, right? People want to be in a winning team. The EMC's got a winning team. There's no question about it. And they're fun. I mean, they're actually really fun guys to go hang out with. It's a lot of fun. Okay, well, Leo, thanks for coming on theCUBE. We really appreciate it. What you've done has been fantastic and really historic. You look at what's happening in the industry. It's been fun to watch you guys and you guys behind the scenes because we can kind of see the tea leaves being shuffled around over the past two years. It's been fun to watch. And certainly since 2010, since we've been doing theCUBE at VMware, all that's been exciting to see. And now that you have decoupled but highly cohesive operations in VMware and Pivotal, I think we'll see a lot more action. We're looking forward to chatting more and hearing more about your M&A strategy and your Corp Dev move. So thanks for coming on. Really appreciate it. This is theCUBE. We'll be right back with a wrap up after this short break. Thank you.