 Live from London, England, it's theCUBE, covering .NEXT Conference Europe 2018. Brought to you by Nutanix. Welcome back, I'm Stu Miniman, my co-host, youth PISCAR, and you're watching theCUBE here at Nutanix, .NEXT London 2018. Happy to welcome back to the program the co-founder, CEO and chairman of Nutanix, Dyrdge Pandey, Dyrdge, thanks so much. Congratulations on 3,500 people. Here at the third annual European show, and thanks so much for having theCUBE. Thank you, my pleasure. All right, so Dyrdge, first of all, you had a lot going on. Big company event here, last night you announced the Q1 2019 earnings, I guess step back for a second. Nutanix is now nine years since the founding. It's been public now for a little while. You've got to be feeling good, you know. Companies reached a certain size, they were respected in the marketplace, so how are you in the team feeling? Yeah, well, I tell people that it's actually fun to be a public company. And obviously there is a cost to being a public company because they own a quarterly sort of treadmill in some sense, but Wall Street also keeps you honest. Just like Main Street keeps you honest on quality of product and customer service. Wall Street keeps you honest on spend what does it mean to really grow at scale? So I like the fact that there is two good streets that are keeping the company honest. It's really fun to think about capital allocation. One of the big things as you grow, I mean, you know, you're going to spend more than a billion dollars this year alone. How do you allocate capital wisely is something that I think a lot about. Yeah, so at this show you kind of change some of the positioning of the portfolio. It's the core essentials and enterprise and right that asset allocation, when I look at essential, you know, XI Cloud, there's all these different pieces, some of them through acquisition, some of them created internally. You need to be careful that you don't over commit, but you know, when do you decide to kill stuff or keep it going? So you got a lot of plates to spend now a lot more than you did a year or two ago. Yeah, absolutely. And it's not just product development, it's also marketing and sales and GNA. I mean, there's other departments where you need to think hard about how do you create brand awareness for these new things? How do you do demand generation? How do you have a specialist sales force? You know, all those things have to be considered. So, you know, nine years it's been a journey, but it still looks like it's nothing and we're still a very small company and need to think hard about the next five years. So one of the metrics you gave Wall Street to be able to look at is what percentage of customers are using kind of more than just the core. So the essentials or the enterprise and if I got it right, it's up to 19% from 15% that the quarter before. You know, I wonder is the packaging, how much of that is for Wall Street? You know, somebody cynically might look and be like, hey, is the core market slowing down and therefore, you know, you need to expand we've all seen public companies that need to go into adjacencies and you know, shouldn't you stick to your knitting? You know, you've got a great solid product with leadership in the marketplace. Well, so look, I mean, we're not bundling them in SKUs so we cannot force customers to actually buy them. We're not doing financial engineering of dollars because these are not SKUs or bundles. This is a journey which is mostly advisory. This is how you should start, this is how you should go and this is an advisory for our sellers and our buyers and our channel people. Everybody needs to say, look, have we had the customer work through the journey? If you had to do what you just said, probably to bundle them in SKUs and then allocated capital to one or the other. I think to your other comment about just sticking to the core, Juniper stuck to the core and many companies out there which just stayed as a single box company, they stayed at the core and eventually you realize the market moves faster than your core itself. I mean, there's this business school thinking, they call it the Icarus effect. The Icarus effect is all about, I'm so good at what I do that I can fly to the sun and then nothing would happen but you don't realize that in Icarus the wings were actually pasted using wax and you go to the sun and the sun actually melts the wax. So companies like FGI and Sun, Nortel, many companies just stuck to one thing and they could evolve actually. Obviously you're not sticking to the core alone, right? You're expanding the portfolio. I mean, you're just not just an infrastructure company anymore. You do so much on top of the infrastructure on-prem. You have so many sad services. So how do you manage that portfolio in terms of the customer journey? Because there's so much to tell to a customer, how do you sell it? How do you convince the customer to go from core to essentials to enterprise? Yeah, I mean, the most important thing is leverage. Is essentials going to leverage core? And is the enterprise going to leverage essentials and core itself? Case in point, files is completely built on top of core. So every time somebody's using files they're also using core. If you think about flow, it uses AHV underneath. Frame, as a case in point, when it's going to deliver desktops, it's going to use files because every desktop needs a filer as well. And then when frame delivers desktops on-prem it's going to use all the core. So the important thing is how they don't become disparate things, like they're all going in their own direction. Is there a level of progressiveness where you say, well, if you're using the enterprise features, a lot of them actually going and dragging the core as well or essential. So how do we build that progressive sort of experience for the customer where each of these layers are actually being utilized is the important piece actually. Dear, so we're talking a lot about the expansion beyond the core, but there was a pretty significant activity that your team did on core itself. So the first time I heard about it it was basically said we're doing an entire file system rewrite. Think of it almost as AOS 2.0. Now, from a product name I believe it's 5.10 so I might have trouble remembering which release it was, but talk about what went involved in that. Obviously a lot has changed in the nine years since you created so. Yeah, I mean yesterday in the earnings call I talked about it too, that people scoff at core infrastructure, like how it's going to be a commodity because it's going to be good enough infrastructure. But then I argue that there's no such thing as good enough infrastructure. And companies struggle when they don't focus on infrastructure itself. It's like food, shelter, clothing, and the Maslow's and RQ's needs. If you don't get that, then there's no point self-actualizing actually. So core infrastructure, compute storage, networking, security, you've got to get it right. I mean look at Oracle, how it's struggling at the IAS and look at Google, they're trying to figure out how to make it relevant for the enterprise and Azure has like three, four different stacks for infrastructure. One for O365, one for Azure DB, one for Azure, and now they're rewriting it for Azure itself. VMware has three different infrastructure stacks. One for three tier, where they are very happily saying look, let EMC, the net apps actually run underneath and Cisco's and stuff like that. And then they have this software defined infrastructure with commodity servers. And finally they have VMware and AWS which is going to use AWS services. So now you have three different forks of your code base in some sense, you know. And for us, what's important is how we use a single code base for everything. So architecture matters, you know. I was arguing yesterday in the earnings call that good enough infrastructure is an oxymoron. You need to get core right before you can go and try to live the other layers of the Mazur hierarchy of needs actually. And that's why we went back and thought about as the workloads were growing and increasing and we had mission critical stuff in memory databases, what do we need to really do about the way we lay out the data and lay out the metadata. So as you know metadata is at the core of anything in systems and especially storage systems. And the metadata of our erstwhile system was actually built completely distributed. And then we realized that some things can be local and some things can be distributed and that's better scale. Again going back to this understanding of what things can be represented locally for a certain disk versus what things need to be global so that you can go and say okay, where is this data really located, what drive? But once you go to the drive you can actually get more metadata. So again you're getting more progressive scanning. So at the end of the day our engineers are constantly thinking about performance and scalability and how do you change the wings of the plane at 35,000 feet? So that's one of the issues, right? So you're still focusing on your own infrastructure layer, right? But many customers do already have presence in a different hardware stack or the public cloud or some service provider. So not everything runs on your platform. So how are you planning to deliver the services on top to customers that don't necessarily run on AOS? So that's the multi-cloud journey which is basically the enterprise journey of our customers. I said this yesterday in the earnings call as well that all our services should be available both on-prem and off-prem. This idea of a VPC that is multi-location is what hybrid cloud is all about. So how do you get a virtual private cloud to really span multiple clouds and multiple locations? You know, I think you saw from the demos today of how you're really running all of AOS on top of GCP virtual infrastructure. And in the course of the coming year till you'll see us do the same thing bare metal Amazon and bare metal Azure because they deliver servers in their data centers and that's leverage for them because they've already gone and spent so much money on data centers that it's easy for them to deliver a physical server that our software can run on top of. And if people are not using AOS they'll still want to use things like frame and beam and calm and other such things. Derek, what are you hearing from customers and how do you think of hybrid as it were? You know, a lot of attention gets played to things like Azure Stack from Microsoft from VMware on AWS. I know you've got some viewpoints on this. Yeah, no. In fact, so if you go back five years, hyperconvergence had become a buzzword maybe three, four years ago and there were a lot of companies doing hyperconvergence and only one or two have survived. It's us and VMware basically have survived. Everybody else has a checkbox because the customer said, well, what about that? Like, well, we have a checkbox but it's really about operating system sort of hyperconvergence. And it has to be honest and it has to really blur the lines between compute and storage, networking and security. I think hybrid needs to be honest and one of the killer things that hybrid needs is blurring the lines between networks, blurring the lines on storage so you can do one click replication and one click failover. So a lot of those things have required a lot of innovations from us. That's why we were delayed in XI and we didn't want to just put up data centers just like that. I mean, if you go back in time to many hardware companies were putting open stack data centers and calling it their new cloud in response to Amazon and VMware tried vCloud Air and they had a charter to go spend money. They went and spent a ton of money on hardware without even knowing that the cloud is not about data centers. Cloud is about an experience. It's about e-commerce and computing coming together and you have to be passionate about a catalog. The marketplace, the catalog so that people can really go and consume things from a catalog. I think that's what our experience has been that. Look, if you don't think of it like a retail giant or retail customer which is what Amazon has done such a good job of. They've thought about computing as an e-commerce problem as opposed to as a compute storage networking problem itself. And those are the lessons that we have learned about hybrid just as much. All right, you did a nice job in the keynote laying out that Nutanix like your customers you're going through a journey. The crawl walk run, if you will. We got a tease in the keynote this morning about some of the cloud native where you're going. Kind of final question for you is if you look at the company, you said still young. Where are your customers going? Where are some of the things they need to work on and that Nutanix will mature with them as we look to move forward? I mean, look, I think everybody knows where customers are headed. The question is who fulfills the promise? Because the requirements are all the same. They all want to go and use next generation infrastructure. They want to modernize their data center as the infrastructure. They want to use some things that they want to own some things they want to rent. The question is where is the best experience possible? And by that I mean not just systems experience of hybrid clouds but also customer service and having an ever-growing catalog and being able to deliver things for developers and DevOps and technology will come and go. Like two, three years ago, it was Puppet and Chef. Like the hottest thing on town today. It's Kubernetes tomorrow. It's going to be something else. It's the fact that what you say is what you do and what you do is what you say. In our business, it's about integrity. I was arguing about this yesterday in the earnings call as well that building business software is a little bit easier. It's not, I shouldn't trivialize it as much but if people use business software they can work around weaknesses of business software. But even the business of infrastructure, applications cannot work around weaknesses of infrastructure. So integrity matters a lot in our space actually. And that is about great products, great customer service, fast innovation, recovering fast, being resilient. Those are the things that we focus a lot on. All right, well, dear, thanks again and always. We didn't even get to talk about the with heart, the fourth H that you've been talking about for the honest, humble and hungry. So thank you, congratulations to the team and always appreciate you having on the program. My pleasure. All right, for you, Piskar, I'm Stu Miniman. Stay with us two days live, wall to wall coverage. Thanks for watching the queue. In the software and technology industry for over 12 years now. So I've had the opportunity as a marketer