 Live from New York, it's theCUBE. Covering AWS Summit New York 2018. Brought to you by Amazon Web Services and its ecosystem partners. Hello everyone, welcome back to theCUBE's exclusive coverage here live in New York City. It's our live coverage of AWS Amazon Web Services Summit 2018. I'm here with CUBE alumni, friend of theCUBE and industry executive investor, CEO and entrepreneur. Soon to be another startup, I'm sure because he's a serial entrepreneur, Madhu Sudhakar who's a good friend, great to see you. Thanks for coming on. Thank you, John. Great to see you. So, you know, been a successful entrepreneur. You've had multiple exits on your companies you've been involved in. We've been knowing each other for years since theCUBE started. Yes, sir. I've watched you build great companies. Good karma. Good karma. So we'll keep it up, keep it going, pay it forward. I really want to get your take as more of an analyst segment here because you're in the front lines, you're looking at a lot of deals, you're investing with VCs, you're talking about private equity, you're out in the landscape, you've got a good vision, you've got a wide aperture right now. The horse is on the track. Cloud is decimating IT. You're seeing a landscape now certainly moving to the obvious destination we've been talking about for years which is cloud native, DevOps, infrastructure as code where developers have now a multi-multi-year sustainable track record of building great apps, mobile cloud. And now the operators on the IT side is clearly in line of sight that you're starting to see the adoption and expansion of the role of the operator of infrastructure, operator of IT, being cloud operations, not storage provisioning, storage administration, assist admin, that has now moved over. And the people who aren't yet there are soon will die if not they don't transform. So that is pretty much happening right now. Yep. Your take on the current market. Growing, is there money flowing? Where is the action? I think there's a lot of good trends going on. I call it like the last two years is like I call it animal spirits have been unleashed. People are really making lots of money in the startup space and public markets, right? Particularly cloud, as you said, it's like a runaway train. It's going to be a 50 billion revenue in 2018. So if you're not making money on the cloud for the cloud, you're a fool, right? So I think most companies, startups or big companies have to get on the cloud bandwagon. Anybody who is not, they're getting killed and they're going to be gone. My prediction is the companies that we know in the enterprise space, in the IT space, five to 10 companies will be gone in the next five years. And that will be in the IT side. Like we already saw the storage market is decimated, right? You're going to see the compute market is gone, server market, right? Only a few players left. The next will be in the, I'm seeing in the IT operations market, ITOM, which is a separate magic quadrant in Gartner. Similarly IT services industry. Those two industries will be the next big ones to fall. IT operations and IT service management soon to be decimated by the cloud. Or in the sense of how it was defined in the past. How is it being transformed today? Because we're seeing service catalogs, those kinds of concepts moving directly to the cloud. I mean, you talk about Kubernetes and Docker containers, you can put a container around an app and you don't need to rip and replace. You can just put a container around it and let that life cycle of that app go away at its own pace while adopting a modern infrastructure. But it doesn't really give any longevity to the apps. So, okay, that's kind of a holding pattern. Takes the pressure off the IT guys. You got Kubernetes and service catalog, service meshes on the horizon. This is changing IT operations and service catalog and machine learning and AI over the top. So this has to be the most confusing time in IT for this area. Confusion is opportunity. It is, I think that's what I call it. IT apps moves into what I call, for the namesake, I'm going to call it AI apps, AI driven operation management. The whole idea there is that DevOps, SRE, Site Reliability Engineering, IT admin, I think 80, 70% of those jobs will be gone in the next five years. All the big clover of- DevOps and Site Reliability Engineers, SREs. Will be automated. Will be automated away. 70 to 80% of their roles will be automated. So if I'm at DevOps and SRE and IT admin, I should be looking for doing something better in the next five years. Because my roles will be automated to some extent by these vendors in the cloud. So that's a big- That's your prediction. That's my prediction. 80%, 70 to 80% of DevOps and SRE, Site Reliability Engineers. And IT admins. And IT admins will be automated away. In the next five years. Next five years. So that's one tool. The second rule is an IT service management industry. What we call L1, L2 support, right? The service agent jobs and L3, L4, the knowledge worker. Those jobs, 90% will be automated. I mean, imagine if you have a question saying that I want to reset my password. I want to grow my elastics cloud storage. You're not going to talk to a human being. That function will be automated to the point everything will be done algorithmically. My analogy is you're in New York. Trading is automated today. Your cars are going to be automated in our lifetime. Yet IT is not automated. So IT is going to be the first place to automate will be IT ops and IT service management. That's going to really change the game. I love that prediction. We're certainly watching on theCUBE. But I got to ask the next logical question, which is, okay, IT jobs are going to get automated away. We've been saying, and I've been saying on theCUBE, this ain't like the mainframe days. So it's not going to take the same trajectory where mainframe became a dislocated resource by replaced by client server and other things. We've been saying is that the jobs will shift to higher value opportunities. So the question is, assuming some get automated away forever, but the personnel labor has to shift. Where do you see that in your vision? Because I think a lot of you are scratching their head saying, okay, I'm going to watch the IT operations and all this automation. We need automation. Automation helps us go faster, helps us scale up and out. But I have a human capital challenge. We do I deploy the human capitals and the natural places to the high value activities. So where are those high value activities? Very good question. So I think to me, my point is the function that are being automated, these functions are low level jobs, right? To the same point, nobody wants to do a service management job. Nobody wants to be a service agent trying to answer John's questions. So these people, if you give them the programming, development results, they will become programmers. They will become developers. Analytics. They'll become analytics. They'll go to machine learning engineers. So I think they all will move up. There's so much automation to be done. So moving up the stack. Moving up the stack in software engineering from purely answering the phone call, being a knowledge worker. So they are looking forward to the jobs. So they actually, I call them, they're moving to the Neverland. It's not that they actually enjoy what they're doing today. They actually enjoy better in the future. The mundane, boring tasks that nobody wants to do. And even the developers, what DevOps was really amazing at was having the developers not have to do all the boring provisioning and the configuration management hassles that used to be like, frankly, like taking out the trash and rock fetches. So one other point on that is, so I call them tuners. So you still need tuners. So when the dust settles, you don't need million tuners. You may need thousand tuners to the DevOps and the studies. I'm tuning the hardware. I'm tuning the applications. The tuners and the knobs. Tuning the knobs. So how many tuners do you need? Not every company need million tuners. So the number of tuners for every application, every company will be very few. The rest will be automated. So I want to get your thoughts because I've been riffing on this concept in my mind. I haven't talked about it publicly yet. So I want to get your kind of, we'll collaborate in real time here around the notion of a full stack developer. Mark Andriesen wrote the big story, 10X developer and you know, go back five, seven years ago, full stack developers, you couldn't hire them fast enough. Everyone needed full stack developers. In a way, if you look at what Google Clouds doing that Amazon have done and doing, basically they're creating a full stack as a service. So question to you is, will the cloud be a full stack developer on steroids? Because you can almost say, I might not need to have a cadre of full stack developers. If I have all these services at my disposal, I only have to hire a few full stack developers. And I'm essentially getting the equivalent of a 10X kick up in full stack as a service. Because if you look at the cloud as a horizontally scalable infrastructure, I can get more out of it, like a full stack developer. They don't have to go build out everything from scratch. Your thoughts. You're absolutely right, very good question. Say look, if you're Amazon, what Amazon has done is, I call them cloud stack developer. I won't even call it full stack today. For my companies, we are hiring cloud stack developers. So cloud stack means in Amazon, Amazon is a past service today. Before it was BA WebLogic, Cloud Foundry, pivotal now, Amazon is a past service. It has all the services from connectors to kinesis. So in the Amazon's world, the past itself is Amazon. And the cloud stack is what Amazon is providing there. So these developers have to understand entire end to end. And Amazon is also offering something like Sageware Maker. That's like an auto ML platform. So if I'm a machine learning engineer, I'm getting all the tuning loss. Describe auto ML for the audience. Automatic machine learning, auto ML. Machine learning today is very manual. People are creating models, you train the models, you put them to execute the model and score them, et cetera. What companies like Amazon are doing it, and Google are doing it, they create this platform called auto MLware. The models are created on their platform, executed on their platform, scored on their platform. So everything is automated from building the model all the way to execution. So all the grunt work that you need, that you have done in the last five years is all done as a part of their automaton. So what kind of machine can learn is learning machines and built into it? You have cloud statistics on it. You're trying to understand which model is scoring better. You can take down the model. The whole life cycle of the models is built on the platform. That's what we need. It's kind of like the cloud institutions in a car when everyone else is on horse and buggy. Yes. It's a whole nother engine. It's a whole nother engine. So here's a question for you. Since you get such an expert, great conversation. So I know a guy who I was having a conversation with, he's like, hey, you know, I've been investing in another sector healthcare for the past five years. I've really been paying attention to cloud. Now it's on my radar. Oh my God, there's so much. I used to be a really good investor in a B2B enterprise, but the stack has changed. How would you describe and give him a tutorial on what's been the big stack change? If he wants to be an effective investor, what are the key changes? Because the old stack was pretty basic. Right. You had a database, you had a network database, middleware application. Now the new stack looks differently. How would you describe that new stack? I actually call the new stack is actually called, I call everything is service oriented architecture. Everything is API driven. It's like a spaghetti. If you actually look at most cloud software, everybody's calling everybody's API. It's no longer a monolithic, no longer a three tier architecture. So it's a spaghetti driven. Spaghetti looks cleaner than the cloud software today. If you actually try to review the code. So I think that's a new stack where everybody's calling Twilio API to AWS API to Azure or Google Cloud. So everything is service oriented architecture. So what's the core competency then? If I'm going to build a platform that's going to be enabling all kinds of new things, what do I need to focus on to? I think we are at AWS. I think if I am somebody new, I want to be on Amazon, on how to build an applicant Amazon at scale. And how do I do it the best possible way possible is through Amazon. Okay, so let's talk about trends. So let's talk about venture trends and then private equity trends, venture trends. What are the hottest things in venture capital right now from an investor? What are they writing checks for? What's hot and what's not hot? I think there's a lot of areas that are hot. One area that's hot, continue to be hot is the SaaS and cloud services. As I said, cloud is a $50 billion. Cloud is getting a lot more traction than actually security. Security is mature. We have 10,000 plus companies, I understand. So I think cybersecurity is kind of mature right now. There still will be some companies, but IT operations, cloud operations, DevOps, AIOps, ITSM, all these markets are rich enough for people to disrupt use of. And they're changing radically. And they're changing, to that point. Broadcom just bought CA for $19 billion. BMC got acquired by KKR. Why did Broadcom buy CA? It's a great question. I think there's a lot of investors are still trying to figure out that. But I think they want to probably create a hardware software integrated solution like Apple, right? If I am Broadcom, I already own internet switches. If I own the software on top of it, I can create a verticalized solution like Apple approach. It's going to be like a unique offering in this marketplace. And BMC had a private equity event, $19 billion, KKR. And KKRX. What does it mean? What is the impact for the people watching? I think as I said, look, everybody in the space of traditional, I call them the four horses. Remember the HP, CA, BMC, ServiceNow, IBM, the five horses maybe. These five horses used to be the working hearts for IT. They are the most to lose in the cloud. The cloud is disrupting them. Either they have to swim on the cloud or live on the cloud. Otherwise, the cloud is going to be a huge technology. So I'm going to push you on the spot because Michael Dell's watching. He always watches theCUBE. Dell Computer, Dell Technologies now. Doing really well. His debt thing paid out. VMware, he's keeping that separate. Michael Dell's in a market that is supposed to be declining, but it's a huge market. Decline is less than the overall size. Is he winning by some growth? Or is he just eating like HP's lunch? Is he doing a good job? Your thoughts on Michael Dell and Dell Technologies. I think, look, he has done a fantastic job. I think the whole Dell engine has been going well. VMware is the greatest asset. Pat Gelsinger has done a great job. I mean, it's a huge turnaround. So the only guys who are losing, if Dell and VMware is winning, all the other guys who try to do open stack, the guys who try to do containers, all those guys, all the venture capital is lost in this. I always look at it. If somebody is doing well, somebody must be losing it. So who lost? The whole bunch of VCs lost their money who bet against VMware and Dell, right? So those are the losers. The gainers are Michael Dell and VMware. And they got done because they did good investments. They did good operations. Now they have to take it to the next stage. So I think their next chapter would be IT as a service. If I'm Michael Dell, he'll be probably buying companies for IT as a service. He doesn't have any money left over. I asked him to get some dry powders. I got plenty of dry powder. IT operations is a good opportunity for him. Obviously, multi-cloud. Your thoughts on multi-cloud Dell, certainly. SAP, others don't have a cloud. And they're okay with it. Like, hey, our cloud strategy is we support the cloud, SaaS businesses. And IT operations could be an opportunity for Dell. I think Cisco, SAP, Oracle, Dell, I think these four have to figure out a multi-cloud strategy. How do they live in the cloud, compete with Amazon, Azure, and Google? It hasn't happened yet. So that playbook is to be done. Madhu, what are you working on now? I know you always, you're kind of biting your lip there. You want to spill it out, but you're in stealth mode. You got another venture cooking. Right now I'm just enjoying my life in New York City with you and talking to you. Stay tuned. Smile, he's got a smile on his face. You always got a cooking venture. Always great to have you on. Great to see you. Thanks for the commentary. Final thoughts, Amazon growing significantly, cloud landscape, Google, Amazon, both consumer companies turned cloud or built clouds for their own selves. Microsoft, Oracle, IBM, not consumer companies that had to build a cloud because they had to build a cloud. Do you see a pattern there? And does it matter? No, I think, look, all three cloud companies have surprised they've done really well. Amazon, Microsoft, Azure, Google, GCP. I mean, to my surprise, they have done extremely well in the last three, five years. They'll continue to the next three to five years. The question is who's going to catch up with them? Who's going to work with them? And who's going to partner with them? Final question, dark horse out there. Name a company that's a dark horse that you see that no one else is seeing. That's going to make a move and get on the radar. I think everybody's betting against Oracle, but I think they'll come back in the cloud as number fourth player. They're going to make moves and let's not bet against Oracle. They've survived so far. All right, Madhu, thanks for joining theCUBE. Legendary investor, entrepreneur, multi-exided, successful entrepreneur, soon to be CEO of a startup. Madhu, thanks for joining us. Live CUBE coverage here in New York City. I'm John Furrier, thanks for watching. Stay with us all day live. We're on twitch.tv slash silicon angle. Of course, go to cube.net as well. All our contents there and a lot of great stuff happening in the community. Join the conversation, we'll be right back.