 Live from the Sands Convention Center, Las Vegas, Nevada. Extracting the signal from the noise. It's theCUBE covering AWS re-invent 2015. Now your host, John Furrier and Brian Graceley. Okay, welcome back everyone. We are live here inside theCUBE at Amazon re-invent 2015. This is Silicon Angles theCUBE. Our flagship program, we go out to the events and extract the signal from the noise. I'm John Furrier. With Brian Graceley with analysts at wikibon.com. We're here with CUBE alumni, Frank Artali. The legend, the myth is in our presence again. Managing director at Ignition Partners. Great VC firm, not the big name. Good size fund, one quarter billion dollars roughly. Welcome back to theCUBE. Great to be here. Yeah, and we like to say we punch above our weight. So yeah, we don't have the brand power but we tend to do well. Well you got a good configuration. I like the VC models, they got small teams, move fast. You don't jerk entrepreneurs around, you make good bets, take some chances. But what are you investing in? You just close a new fund, give us the update on the new fund, what kind of investments you're looking at, obviously data, drones, what's going on? Yeah, yeah, cool. So yeah, I love the drone space. They love to play with them a little bit more right now than invest in them. So we're obviously like everyone else looking at that. But in all seriousness, so as you know, like as John, when we first met, we were investing out of Ignition Ventures 4 and we were investing in the infrastructure of big data and the infrastructure of the replatforming of enterprise IT. And in our last two funds, we've continued to focus on that and really looking at all of the kind of things that an enterprise, again, being a business of all size, we really be trying to do in the future as a transitioned out of client server on-premises switch networking to cloud computing, mobile-first, big data and SaaS. And we're just continuing along those themes. And so in like five years ago, four years ago, it was really about the core infrastructure and now we're looking at more things in the application space. As an example, one of our investments out of our last fund was trifacta. And so if you think about the relationship between something like Microsoft Excel and Microsoft SQL Server, we view the relationship to something like trifacta with the big data space. And you should expect us to see us do more things like that, that leverage the new infrastructure and enable cloud computing, enable mobile-first and enable the use of big data. Some of our audience might know from the previous interviews that you've been on that you've been a big Microsoft person, you've been there, you're the original product manager for NT and that's NT server. And then obviously the monopoly of Microsoft was taken down by the government. I was there for that. It was good competitive strategy, as I always say. You know, when you get broken up, that means you executed excellent competitive strategy. But Microsoft had a great franchise. That's the monolithic, that's the software model that you were referring to client server. Now, Amazon feels like Microsoft. We were talking about it in our opening. They're competing on a different value proposition, but they have a monopolistic flair to it. They got a storage box called Snowball that they're going to be shipping. They're in the shipping business, shipping at Amazon.com. So I'm seeing this growth of this new company, Amazon Web Services, within the big monster, Amazon, huge competitive strategy opportunity. How do companies compete with that? I mean, if you're out there, if you're Azure, certainly they got moves. What's your take on all this? So in a lot of ways, as I was sitting through the keynote today, and I was trying to think of an easy way to characterize it for people. So I knew I was going to be here speaking with you today. And the last couple of years, it's gone from people trying to understand what cloud computing is, and understanding then how early deployments can occur. And now there's just a lot more happening in terms of understanding the kinds of things that are barriers, right? So we moved from, when I was at Microsoft, we were taking people from Mainframe and Mini to client server. There were all these barriers that need to be overcome. Like first, it was a new application programming model. We had to move from that. Then there were things like data security, data backup, so compliance, right? Configuration management, all of these things. And so like, if you look at the bulk of the keynote today, like even data import, how do you get data from IMS onto SQL Server or onto Oracle running on a Sunbox? So it was like eerie that, okay, 20 years come full circle, and all the things that I used to go to beg independent software vendors to build, right? Was, it's what's happening there. So I think in a lot of ways, it's still kind of early days if you look at the adoption cycle, or from a momentum perspective, the independent software vendor momentum perspective and the ecosystem perspective, Amazon is a force to be dealt with. And I've seen them coming off a long way. Of significance today was the announcement with Accenture, which is odd that the AWS re-invent keynote, the biggest announcement was a partnership announcement with an old line global SI. And so I think what you'll see is as sort of the, let's say people start choosing upsides right in the schoolyard on where the fight's going to be. In a lot of ways you'll see that there'll still be a number of players and customers still will want choice. Customers on their own will say, I have to avoid locking because that's what happened to me 30 years ago. And so as long as that mentality still exists, there will be a place for competitors that can provide different kinds of value. And so you can expect the folks at Microsoft to play from their strength. They'll say, .NET applications are at least 50 to 60% enterprise apps, SQL Server Exchange, Identity. What's the affinity between Azure and that? And then AWS will play from a value of not only cost, but also certain enablements and delivering features faster. So all of these clouds will attempt to provide a different set of values. I think the thing is we're still early days that there's room to see a lot of competition. And at the end of the day, that's great for customers and also great for software vendors that are filling in the blanks as we'll see in an ongoing way. Yeah, so you spent some time at Microsoft, obviously. You've seen the platform play. You've seen what you can do with the platform play. How do you think about that as an investor? When you're looking at, Andy's making announcements, he'll go, well, a couple years ago we did this building block and then the next one, how far do you have to sort of think ahead to go? Where are they going? And people show up and go, hey, we're looking for money. No, no, you're in that. You're right on that trajectory. You're in the tornado, yeah. Yeah, so my job, when I was at Microsoft, I was a product manager. We called it Program Management on Windows NT. And I always had the relationship with a lot of the ISVs that would come and say, hey, Frank, what would you like to see exist that you can help take to market? And what can you do to help me prepare so I can stay out of your way? And the advice I would always give them is just imagine I'm a big bear, right? And I'm running through the forest, right? And I'm just, I'm hungry, right? And so you got to avoid being damaged, right? So there's a couple of ways you can be damaged. One, right, you can get big enough that I suddenly believe you're food, right? And I'm going to eat you. Or I could reverse field and just crush you because I didn't see your collateral damage. Or even worse sometimes, like you're trying to get my attention to show me something and I just ignore you. And so that's really the same- Don't poke the bear. That's a lesson. Don't poke the bear, right? The bear can actually do some other things to you that I won't say because we're on live television. But in essence, it really is up to those, the companies that come and pitch a business to us to explain to us that they really do understand whether it's Amazon or Microsoft or Google, whoever they're saying their primary partner is, they really understand the nature of that business and the relationships that they have. Around which they formulated their thesis why they've got that. And then on the other side of the coin, it's also up to me to maintain those relationships with folks like here at Amazon and everywhere else to really understand where things are going. But that being said, when any business gets to be big enough and cloud computing it's a little bit different because if you look at any cloud computing vendor like AWS goes right here, they can actually see what a lot of their partners are running. And they say, oh, a lot of people like today, they might have said, a lot of people are running MariaDB. And so today is announced, MariaDB support. So if I'm in the support business for MariaDB, maybe I'm not that happy about that today. But in general, the longer you go. Cloud search providers are also in the same boat too. You got to start questioning what side of the street you want to be on when the music stops, you want to be not competitive. So for me, like in our business, we tend to skate, we like to say we skate to a puck, but that isn't even on the ice yet. And so we're investing early, early enough also to know if we see bigger players coming in too early, that we coming in early, that we can actually do things either pivot early or provide a strategic exit or other options for the company. It's what we do for a living. I'm going to ask you the question on pivoting, right? So obviously start up a week that's been kind of, wasn't around when I was doing startups venture funding, but you realize you got to pivot, which means change course, essentially. You got some money in the bank, you got to pivot. That's one thing. And startups can do it very fast. So the question I have for you is, how do the whales pivot? Because, but the logic is on the cue we were talking this in the intro is, they still move slow, but they can still move faster than they were years ago. So if your HP, your EMC, your Oracle, they're buyers of your company's potential to the M&A market, super hot right now. They got to be looking at the freight train coming down with Amazon. They're like, they're also a bear, right? So the fish coming, the salmon coming out of the water is the startups. So that's your deal, right? So what is that pitch to those guys? And what have they got to do? How are they pivoting? Yeah, and so if you look at, if you look at like a larger company, a potential buyer of smaller companies today, one of the hardest things for those folks to do is actually hire people, right? So in today's climate, like if you're a hot software developer or a product manager, your tendency is to say, okay, I'm in the largest possible renaissance of enterprise computing. Now's the time to take the risk and go to a smaller company. So given an apples to apples comparison of, say a job offer, unless someone has a real need for a very, very long-term security, they'll probably go to a smaller company. And so part of the pitch when we're speaking to potential buyers of our companies is that, we'll say, look, you can go open 50 headcount and try to fill that and then do software development and using your traditional product development strategies. And two years from now, you might have an MVP. Or if you're really, really interested in getting into the space, and we have a hot property, then that's a conversation we could have. And, but at the same time, we are seeing some of the larger companies take a cue from the smaller companies and starting with much smaller teams and being willing to fail fast and make mistakes. So again, I come from the cathedral builders, right? Like 20 years ago, where you set out on a three-year product plan and you shipped your first beta 24 months out. You don't see the big guys even doing that today. They're all moving to a much more agile method, moving to an MVP kind of strategy, get something out, get customer feedback and get on to the next thing. Well, and those guys not only have to be willing to say, like, look, your product is potentially going to augment in my portfolio where place, but they got to be willing to say, look, I'm going to accept the different sales model. Because if you're selling software, different than selling hardware. If you're selling it out of the cloud, it's on demand. I mean, that's the other piece. I don't think a lot of these big guys really are grasped yet. They kind of go, I love the technology. It looks great on a portfolio slide, but how do I sell it? Why does a customer going to want to engage with it this way? Right, and even beyond that, they're bigger challenges for a lot of these bigger guys when they're taking a piece of technology and then turning it into a product. For many of them, that thing needs to be available. And again, in their current world, available on a worldwide basis, at least eight languages on the day of release. Otherwise, all of their channels of distribution get messed up. So they do need to have a fundamentally different way of thinking to say, can they answer the question, can I actually launch this US only or US languages only? So it is a bit of a gut wrenching experience for them, but you see pockets of hope here and there. I think they all know they need to evolve, or like you said, become the dinosaurs that no one wants to believe that they are. Frank Artali inside the queue, I'll give you the final word to end the segment. Summarize the phenomenon that is AWS for the folks out there that aren't here. What's the big story here at this event? Yeah, and I think one of the things, at least that I saw on the keynote, as I was saying earlier, finally got to be in the front row of the keynote and see the slides for a change, is that the slope of the graph remains the same. So they're still growing. They're growing that big number year over year in the way that they said it would without flattening. So that's A, on the growth side, and B, just great support from their partners and their large customers. Okay, Frank Artali in the queue. We'll be right back with more. Check out silkenangle.tv. Did you know we have podcasts up there now? Go to there, check out the podcast. And we'll be at Dell World coming up as well as Oracle Open World, the Grace Hopper Women's Celebration event. Check out the queue. We'll be back more with live coverage here at AWS re-event after this short break.