 Live from San Diego, California, it's theCUBE. Covering KubeCon and CloudNativeCon. Brought to you by Red Hat, the CloudNative Computing Foundation and its ecosystem partners. Welcome back to theCUBE here at KubeCon, CloudNativeCon 2019 in San Diego. I am Stu Miniman. John Troyer is my co-host and joining us is one of our esteemed Kube alumni multi-time guest, Steve Herrod, who is the managing director at General Catalyst. Steve, thanks so much for joining us. Always great to see you. It's good to see you again. All right, I'm having the flashbacks, meeting with the two of you at a certain campus in Palo Alto and the like, but it's interesting, Steve, before we get into this technology, we kicked off this morning talking about a company, Docker. We knew Docker from the early on. I said, look, Docker had the opportunity to be this generation's VMware. It has had a huge impact on the market. We wouldn't have 12,000 people here if it wasn't for them. Your take kind of as to this wave of technology and we'll start there. Yeah, well, I guess I'll start with Docker, the company. I mean, it just shows you, boy, it's hard to build big companies these days. And I think there'll be plenty of people talking about why or why maybe that didn't work out or did work out. Maybe there's too much stuff given to open source, maybe not enough, maybe there isn't enough community. But I do think, I think that's a tale of just how hard it is to be out in this world. But on the flip side, they certainly moved toward the idea of containers and got things going. We always have a saying in the venture business, actually, and in the startup business, which is, it's sometimes the second mouse that gets the cheese. Someone's got to break a little glass and then sometimes someone else comes in afterwards and gets some of the reward for it. Yeah, well, Steve, this is a sprawling ecosystem. We went from 8,000 people last year, 4,000 a year, report over 12,000. And this ecosystem keeps growing. You've got a portfolio company that launched this week. You're checking out the show floor. Maybe let's start with the new one coming out from your side and go for it. Yeah, I actually have several startups that are here, but I think what's been interesting is the opportunity to create new companies. If you look at the, I'm sure you've covered a lot of them, but if you look at the sponsor sheets here, there's literally hundreds of booths that you can go see, and many of which are in similar areas, many of which are open source. So it's really a challenge, like as you all trained interviewers and me trained looking at the space, think how complex it is to a customer right now. Think about like which service mesh do I pull together with this and that and which command line and which API tool? So I think that's both the challenge and the opportunity you often see this early on. One company that we just had coming out is called Render, and their idea is to build an application platform service kind of on top of all this and just to hide it all from the user, which I think is, yeah, I think that's what always happens in these ecosystems. You get so many players and then someone will be the bundler and make a suite out of it, or someone will run a service on top of it all and take it away from you. So I think it's sort of a healthy part of a rapidly changing ecosystem, and Render will be doing some interesting things, but they talk to application developers, not to infrastructure people. App developers don't want to know about any of this. Well, we're sitting here at Kupron in the midst of kind of that right at that margin, right at that boundary between, from one perspective it looks very developer-y, but from another perspective, this seems very operator-y here. I mean, how do you see in the market, in the place with the buyers, the CIOs or the technical buyers out there? I mean, how are you looking at infrastructure versus developers and cloud, et cetera, right? It's funny, you know, we're all infrastructure people for the most part, but what I often say, I know you all know that as well. At the end of the day, infrastructure is only there to run applications. It has no other purpose in life except to be a great place to run applications, but it's also accountable for doing a lot of the things you need. It has to make it run fairly at a certain performance. It has to make sure it's safe from attack. It needs to make sure the data is backed up. So I always just try to think about that when I'm looking at these startups, and we were just talking about this before the show. When I go up to one of the booths and I ask, I usually ask, how do you make someone's life better? Sometimes you get someone who's not the most senior person at the company and they'll quickly go into the technology on how it's this or that, but if you can't frame it in the context of how some enterprises' applications are better, faster, safer, then it's really not that interesting, I think, to a CIO who has all these decision-making. So anyway, I keep coming back to that with whatever infrastructure or application companies out there and try to wonder what's going on. Yeah, no, I do really like that as we often frame it. What is the business value? Nobody really has a problem that I need to rub Kubernetes on. Yes, I need agility. I need the result of what having a distributed architecture drives for my business is what I need, not the niggling little details there. So I love that piece of what you do better for a company. The other thing, I walk around and I talk to some of these companies and some of them, I scratch my head a little bit as to the, oh, well, I created a cool project and we've open sourced it and that's my business. And as we talked about the cautionary tale of Docker, where are we with open source and business model and what's your latest take on that? Boy, that is every evolving. It's funny though, if you look at even just the last 10 years since you've been covering things, the go-to model for most open source companies has shifted from maybe supportive subscription to really, some of them are open core, meaning parts of it are closed source, but more and more that they're really well-to-do ones are running them as a service. And so that tends to be what we look for now is whether you're running it directly or you're doing something with a Microsoft Google Amazon where you get some of the revenue from it, which is a big if, that seems to be one of the better ways to consume it and the people who have control of the software should be the best at operationalizing it. So that's kind of the change that we've seen as of late. Yeah, a quick follow-up on that. When we look at the hyperscale as the public cloud, their marketplaces are gaining more and more, you know, it's just a big force in the marketplace, especially AWS, but Azure's pushing that way and Google to some extent there. You give any advice to your portfolio customers? How they should think about their relationships with the big cloud players? Well yeah, I mean that's one of the biggest discussions, not even just for our tech companies but our commerce companies and everywhere else. But I do think what's kind of interesting in many cases we're seeing the companies talk about maybe Amazon or someone is running that software as a service and it's maybe it's a little older version or maybe it's not all the bells and whistles. So there's certainly a case where good enough is good enough and it kind of crushes the startup. But you also hear a fair amount of tales of where it introduces them to this concept for the first time and then they're going to move over to perhaps the best of breed case. And so obviously getting that right is a big job for the founder as well as for an investor. But I really see it as a mixed bag. The notion of being introduced to a customer at a lower cost than ever before matters a lot if they didn't switch to you. Well Steve, another boundary that you're sitting at is the boundary between all these technology providers and the customer. Any particular observations on trends over at the customer side or people looking to save money or people feeling good or are the techies really leading the adoption? Is CIO down at digital transformation? I mean you're sitting right there in the middle. Yeah I mean the good news for I think all startups are that software matters and the digital transformation that's been going on for many many years continues in a broad way. I would say at the end of the day though, like the one question I almost asked just back to your point on business value. I ask any startup, tell me why you're at least 10 times better than everyone else in this space. And because it is the bad news of so many startups and so many cool ideas is how is anyone to choose? So if you ask any of your CIOs they're just massively confused. They try to look for a bigger vendor who could possibly bundle it all together and make it as sweet. That's super enticing as you know to all these guys. But when you have this much churning change going on someone has to step into that role. So I would just say that the ideal thing is you have a smaller number of vendors that never works with a lot of rapid innovation. So somewhere in the middle you need to have startups that are really good at bundling in with other folks and fitting into APIs and doing that. All right so Steve we've had an interesting view on what's going on in the security industry this week and I know you've got a perspective on it. Our team did the AWS Reinforce show in Boston and was generally upbeat. Talking about all the great things that cloud's doing and modernize everything we're doing. Pac-Elzinger from VMware, banging on the table at VM, saying we need to do over, we need to start over with security. Here at this show some people are very cautiously optimistic that we've solved a bunch of the problems of security, where in your view are we and where are we going? I think we'll never be done with security. However I do think we've reached a maturity level. If you, well you were here a couple of years ago there was so many security companies just for containers and I think that's interesting to some extent but every CIO is going to have a mixed environment and so I think what you see this year and what you saw with Palo Alto's acquisitions, some of my companies, Alumio I know you've talked to, it's really saying let's have one master policy and have it actually then go out and talk to Amazon, talk to my local infrastructure, talk to containers, talk to serverless, that'll be the next wave of things going on but I think whenever you see a maturing of a company like this, the management tools and the security tools that have to inter-operate start to really make a showing and I actually see that quite a bit at this show so that's a sign of I think a little bit of maturity going on here. Okay, last thing Steve, I guess what's catching your eye? Anything interesting or spaces there that you'd call out that we haven't already touched on? Well I spend a lot of time these days actually on and I hesitate to say it but on AI and I mean specifically it is such a hyped term and it's used in many ways like cloud used to be used so it's just sort of a marketing term in many ways but specifically the picks and shovels that are enabling that many of which show up here too because it is being deployed in containers that sort of thing so certainly the tools but more importantly the vertical applications that can have a meaningful benefit from it and I'll say the same thing as with infrastructure AI as a means to an end is not the actual thing you're trying to do but there's been a real advance there and so I'm really enjoying watching where you get these 10x improvements because you're using the data and AI there so I continue to love infrastructure and developer tools and I think especially as they get applied to some of these new areas like AI that's where I'm excited about what we'll be seeing. All right, well Steve really appreciate you coming by congrats to the Devent Render. Definitely look to catch up there if we don't catch them this week we'll get them to our Palo Alto studio sometime. Absolutely, yeah Render's cool, you can go try it out Render.com. All right, for John Troyer I'm Stu Miniman getting towards the end of day one of three days wall to wall coverage check out thecube.net for all of the coverage and as always thanks for watching theCUBE.