 from the Wynn Resort in Las Vegas. It's theCUBE, covering .next conference 2016. Brought to you by Nutanix. Now here are your hosts, Dave Vellante and Stu Miniman. We're back, welcome to theCUBE everybody. This is SiliconANGLE Media's flagship product. Sadeesh Nair is here, he's the president of Nutanix. Sadeesh, great to see you again. Welcome back to theCUBE. Thanks for having me back. I was just telling Stu that long time no see. Yeah, right. That's right, you guys took the Lenovo event last week. So, you guys are cranking. We see some of the numbers, it's great, waiting for this IPO to happen. It'll happen at some point in time. But in the meantime, you're scaling and your job is to scale this company. Talk about how you scale this rocket ship. It's the, if people sometimes ask me like what gives me up at night? They ask me, is it competition? Is it the market? Is it the IPO? I actually sleep very peacefully if any of those things were actually in my mind. The only thing that keeps me up at night is that specific thing, which is how do we scale this company but do it without losing the soul? And when I say the soul, I talk about the culture. And we have three values that we are driven by. We go with the hungry, humble, honest. It sounds a little cliched, but all of those three things are applicable to every function. If you look at sales for example, we are a very hungry team in the sense that we are hungry for business, we hate losing, we compete really hard for every business in a fearless way. But at the same time, we are hungry for innovation as well. Now humble, now when you say Nutanix is humble, there are a lot of people out there who will laugh at it because saying, oh, Nutanix guys are pretty out there, cocky, and all of those kind of things. But if you ask our partners, if you ask our OEMs, if you ask our customers, if you ask our employees, or our investors, they will say, you know what, Nutanix is a humble company. Somehow we have figured out a way to balance those two things. Be very aggressive, but be humble where it matters. And the last part is honest. Now honesty is a good human value, but more so than that, I think an honest product, an honest experience, all of those things are important as well. So when I think about scaling the company, my biggest worry is we have done that at 200 people, we are doing that at 2,000 people, can we do that at 2,000, 20,000 people? And if you see the natural gravity brings companies down to mediocre size. But some extraordinary companies like Google and Facebook, they have done a good job of scaling and not losing the soul. And at the third age, the honesty piece is critical. So often tech companies will just say something and it works this way and it maybe doesn't. You guys tend to be pretty open about, well, it doesn't quite do that yet. We're working on that. We got our best people working on it. We're trying, but that's refreshing, I would think, to customers. You know, I wrote a blog a few weeks ago saying the most powerful two-letter where any salesperson should know is basically no. Because the more no you give to a prospective customer, the more powerful your yes will be. Because if you keep saying yes to everything, they're going to assume that your yes is sometimes maybe, right? I remember four years ago when we launched the product. I got a call from JPMC, one of the, one of the buyer there, she called me and said, we are from JPMorgan Chase. Come and talk to us because we have this project. Now, obviously we are desperate for business, desperate for attention, desperate for anything talking to us, right? But as I was hearing, listening to the phone call, it was very clear to me that there is no way we could execute on that project, not at that scale. So I told her, sorry, I don't think I'll be able to come and spend time because I don't want to waste your time. We are nowhere near ready to execute on this project. And she was pretty, you know, it was difficult for her to believe. Are you sure? I mean, we are JPMC, don't you want to come? And at least hear us out. I said, you will give me one shot. And I want to take a rain check and come back as opposed to coming and wasting. Four years later, when we were on our path for IPO, JPMC was one of the bankers, and they're one of the lead bankers for us. We met her again. And she told me that she still remembers that call. Now you can imagine, she probably gets 100 calls a month at least, right? And what she said was, when you say no, like you said, it is refreshing. So I really do think the sales and the process of selling has to evolve to become more and more transparent and more honest. And the days of sellers and buyers dancing around negotiating, those are archaic models that are being disrupted by Amazon's of the world. So Sudheesh, the thing that I actually found refreshing yesterday when we had some of the analyst sessions is when you're moving into new markets, you're offering some new solutions. It's not that this is the answer. It's actually said, well, this is how we're looking at it. This is how we're going to approach it. We're going to try some of these things for like a quarter or two, and then we'll adjust and move and set up those feedback loops. So can you talk about your partners, your customers, your OEMs? How do you share information, collaborate, and have those, set up those feedback loops? I think one thing that no one will argue is that the market is extremely volatile. It's changing things at a pace that even analysts such as yourself are having a hard time predicting three years out, right? So you have two choices. You can actually go out and assume the world is going to come to you and then build something massive and stay there. The chances are this market will take a left turn and you will be all by yourself. That's a very high probability. Or you can connect the dots and then build something right next to it. Sort of like an incremental innovation. Like a lot of companies are doing innovation around flash. The problem with that is this market is so fast, before you know it'll become commoditized. So you can't build a large company. You can sell a product and sell the company. We believe the right approach would be to be in a constant feedback loop, deliver something, probably not full, deliver it and support it, make sure the customers are actually using it, stay very close to them, to the partners and customers, and see what are the missing pieces, what are the other aspirations around it, and then be in a constant feedback loop with the market, through the analysts, through the customers, through the OEM, and then build an engineering organization and a sales organization that is unafraid to fail, so that they will go out and try different things and experiment. I love experimentation. For example, not just in engineering, when it comes to go to market. So we try to do all sort of crazy things when it comes to our own sales organization, go to market, OEMs and all of that. Only rule is, you should not be too hard on yourself when you fail, and don't make the same mistake again. It's funny, I think back, there's Conway's Law says that you will build, the software, the product will look like your organization. What you described to me reminded me of what a distributed architecture is. You're absolutely right. It's going to be, expect that any piece of this entire environment is going to fail and it's not going to bring down what happens. In computer science, the one of the rules is fail hard and fail fast. So if you assume and notice misbehaving, the last thing you want to do is to do some sort of wait and see, because there's a good chance it could corrupt the entire system. So one of the first things in distributed systems you do is when you sense something is not right, you fail hard and fail fast. Cut it off, move with what you got, right? You're absolutely, that's a very good way of looking at it. I didn't think of it that way, but it makes perfect sense. So what's working for you in the channel? You've talked about some of the experimentation, so you're evolving. You now got bigger, chunkier businesses, OEMs. You've got down market products, so and the channel is evolving. You know, the tin movers are shifting to solution providers. You've got a DevOps crowd, which maybe isn't moving product per se, but they're certainly influencing things. You've got service providers that are a channel. What's working in the channel? And what have you learned as you sort of adjust the knobs? See, I've learned that it is always pace of value if you start empathizing with the audience. If you're doing a presentation or you're trying to do a go-to market, you got to think from the channel partners point of view. Here is a channel partner who used to probably go out and assemble a VBlock or assemble a FlexPod on site and build five days of peers and then stand it up and then do a data migration. That's probably two weeks of peers. And then probably make 15, 20 points upfront on the product and then probably make significant amount of money on the peers. All of that is actually being vacuumed out by Amazon's of the world. Even hyperconverged, some of our customers legitimately worry what happens with Nutanix because I could make margin on the reselling product, but there is no services to be made. It is so simple. And we have seen that unless you are able to address those concerns properly, you know that the resellers have salespeople who are on 100% commission. They won't be able to pay their mortgage if they don't make money for the company. It's not like in vendor ways where they have 50% base. So what we've understood early on is that we have to build a channel program that understand and connects those aspirations and the practical realities. So what we have done, instead of going there and telling them it's all simple there is no need for services, we said let's elevate yourself with the enablement and training. The non-villable hours that most customers don't like to pay for racking and stacking. Let's elevate the conversation and let's look at how do you bring your services organization to the next level where they can start talking about applications, delivery. Because if I'm talking to hospital, how refreshing would it be if my reseller were to come in and tell me here is how we recommend you should set up your Thurner EMR. Here is how you should set up, you know, desktops for Epic. The problem today is most of our stack providers will actually go there and talk about here is how I'm going to set up vCenter with HA. Here is how I do LUN mapping. Here is how I'm going to set up DR. None of those make sense for their business, right? So that's what I think we have done well. I love this conversation because essentially when I think about your why, your why is about simplification. It's about eliminating a lot of stuff that businesses don't want to pay for but at the same time the channel is making tons of money at that. So there's a dissonance there. And you're saying you're filling that gap proactively but that's not trivial. I mean, you don't have deep industry expertise like an Accenture, a PWC or Ernie Young. So how do you actually enable the channel? This is in our company probably one of the most active topic of discussion is on enablement. I'll tell you though. Let's say your dryer broke down, okay? 10 years ago, if your dryer is not working, you're going to call the handyman. Today, your wife or significant other will actually ask you, why don't you go try to fix it? And the first thing you probably will do is go to YouTube, search it, and you'll find a two minute video and chances are you will fix it. You know, if you are halfway decent, you will fix it. The way of enablement that we used to practice is completely needs to get out of the way because no one is going to sit there and read a document anyway. What you need to do is to take the content, simplify it, make sure that the right content is available at the right time to the right audience in the right mode. So what we have done is we have partnered with companies like MindTickle, for example. I don't know if it's a small startup company. We use MindTickle extensively to deliver extremely relevant content in an extremely consumable format right to the mobile app that our OEM partners are delivering. Now, the platform is not useful if the content isn't good. We have built an unbelievably good content team in enablement. All of these are work in progress, by the way. I'm not saying we are perfect, but all of those things are coming together and we have, the person, for example, who are managing enablement report directly to me. I don't have a lot of people reporting directly to me and this function directly reports to me because we know it is that important because the story that you just saw is a complex story to articulate. It's so much easier to go and sell an all flash array, as opposed to selling a hyper-converged. But we are not even doing that. We are actually creating a new market for Enterprise Cloud. So enablement is complex. You have to have the best people, best processes, and best platform. So all those three piece need to come together to deliver a good content. So your services strategy is one of enablement to be an accelerant, right? And leave room for your partners. Talk about that a little bit more. Yeah, this is an important one. So the way we look at services, I don't want to be a bench of warm bodies. That's not the kind of business we are going to be in. But customers do need hand-holding in the island they're sitting and where they want to go. Aspirational, they want to go to public cloud, right? So who fills the gap? So what we have done is, we have built a really small team, sort of like a SEAL team, who can go out and talk the customer's application language and connect the dot and do architecture for large-scale, tomorrow's projects. But as customers are giving us projects that needs to be done today in a smaller scale, we are handing over all of that revenue to our partners. We are providing them the tools, the instrumentation, the documentation, all of those things that are necessary. And then we will also backfill it with our own guarantee, which means the customers will not be, let's say the reseller fails, we are there to support the reseller. And that Navy SEAL team is a four-pay service or it's a loss leader? So I wouldn't say it's a loss leader, I wouldn't say it's four-pay, what we have done is we made sure at this stage, we do not lose a single customer from repeat buying. We want 100% of our customers to buy again from us. In fact, I want 100% of the deal that we compete, I want to win, and I want 100% on to buy. For that, experience matters. So the way we look at it, we absolutely sell it as a separate service, but we don't hold back. I'll give an example. Recently, we did a migration project for a customer for almost 3.2 petabytes. We knew the customer had a deadline where they have to move away from the data center. They paid us basically not a lot of money, but we threw everything that we have, including hardware, extra hardware, no extra cost, to make sure this customer will stay happy. And the end result is they're blown away from the commitment. I am absolutely positive that in the next coming years, we'll make up for more than that from that same customer, because they know that we are not number crunchers and bean counters. We are true partners in their business. So Sudeesh, when Nutanix made the announcement of the Dell OEM, there was concern that they might have channel conflict. So now Dell has been going for a while, you've added Lenovo on there. Can you talk about their relationship and how you're making, you know, balancing that, you know, the channel, the OEM relationship? I mean, this is such an important question. A lot of people don't really understand the details of how we have done this OEM. This is a very special OEM, and a lot of credit goes to Michael Dell and Alan Atkinson and the rest of the team for going out of the way and making those concessions so that this program can be built for the future. And what we have done is pretty simple. We've actually created a deal registration model that is unique across the entire go-to market we have. For example, if Dell XC, which is the product that they are reselling, if Dell were to register a deal, we do not have that registration for anybody else, including our own product. Suddenly, NX and HX, which is the Lenovo product, is locked out, and all of our resources and special pricing is focused on making Dell successful. Similarly, if Lenovo were to come to us and register a deal on opportunity, all of our resources that, then the Dell cannot get preferred pricing on that deal. It requires a lot of automation. Again, it's not a people-driven thing because people won't trust people. It has to be automated. So we threw a lot of resources. Again, we use tools like Vartopia. In a small company, I don't know if you know this, phenomenally innovative when it comes to that specific thing. It can't be any more unsexy than that. But that product solves the problem. We use products like Visru. All of these small companies out there innovating there, we are bringing together to build a platform of the future of consumption. But that requires, sorry, too, but that requires a relationship with your OEMs. They have to agree to that. Relationship and trust. Right, trust. You're absolutely right. And it's a two-way thing, by the way, because it is easily possible that a Dell reseller or Dell seller could register a deal, lock us out, and then sell some other product. It is absolutely possible, right? You're absolutely right. End of the day, OEMs are going to succeed. Any partnership will succeed or fail based on what kind of people you are. And this is where we have come to appreciate the measure of the men and women behind these organizations. You go to Austin and meet the team. You go to Raleigh, you meet the Lenovo team. You look them in the eye, and as long as you treat them with respect and credibility and trust, they treat you back. And I will tell you the reason why these OEM relationships have taken off vertically is less to do with the technology, less to do with processes, more to do with people and trust that we've actually built between the companies. So Siddish, I actually traded notes with Michael Dell leading up to the event, and I said, all right, what's your commentary on the Nutanix OEM relationship? Give me one word. You said it's important. Now, that being said, the EMC deals expected to close soon. What does that mean to Nutanix once the EMC relationship? Is there any EMC relationship? So between now and next February, nothing should change because there's a two different organization. And after February, there will not be an organization called EMC. It'll be a Dell Technologies, right? Now, tomorrow, Alan Atkinson will be on stage, and he will talk more in detail. But the reality is, customers love this product. Dell has built more than $1.1 billion of pipeline at a really high net operating margin for that business. Michael Dell wants a lot of money now because he has a lot of debt to pay. He is a smart guy who's figured out that the future belongs to platforms that sells creative, competitive differentiators that actually comes together on his platform and sell. Michael has no upside in moving XC out of the portfolio, all the downside, if it were to happen. So what you will see in the next couple of days with more clarity is that at least in the near term and towards the long term, the partnership that we have built with Dell and Nutanix is not going anywhere. And as more and more sellers come into the sales force, we hope and we are expecting that XC product will be available for the entire platform and that the Q's that joint companies will actually be selling. Yeah, I mean, you have seen cases where OEM deals like this unravel, but generally speaking, if an OEM deal is productive, and you guys, I mean, you've been at it now for over a year, and it took a while, and it's just really starting to kick in. If they're productive, they tend to hang around for a long, long time, not forever. You don't know what's going to happen in five, seven years down the road, but they tend to look at the epic OEM deals in this business. They tend to be productive for quite a long time. All right, go ahead. No, please. No, I mean, the OEM relationships are like any other relationships. If you want to have a strong marriage, sometimes you have to have a baby. Because there will be times you want to pull each other's hairs off, but then you look at the baby and say, you know what, let's figure this out. The baby that we create with our OEM partners, this is an important point, is that we create unique differentiator for each one of them. We are not treating Dell and Leno as a hardware provider. We are building unique products with them, unique value, unique differentiators. And what happens with that is, I promise when we are disagreeing on something, we'll look at the people, the product, the customers, and then we come back and say, what are we doing? Let's do right for our customer base. That is a joint customer base. Well, we've been following Nutanix since it was a baby and we're watching it grow into adolescence. It's still a baby. It's still a baby, but I'll give you the last word. So as you grow from toddler to adolescence, what's the takeaway that we should be thinking about? I think just like any other teenager when with the pimples and all of that walking around thinking that we have actually arrived, we also will go through our own ups and downs. Sometimes we might say something, do something that make it look like we are full of ourselves, but it's a process of maturing that we are going through as a company. What hopefully we will not lose is the technological innovation edge and that edge we have as a company. We don't deal with our competitors. We want to crush them. We want to win every single deal and we don't take prisoners when it comes to that, but we have that real cognitive dissonance built into our system. We can turn around and be the most humble partner for our customers and our OEM partners. So as long as we continue doing that, one of these days we'll grow up and turn out to be a nice human being. Fantastic. Well, theCUBE, eating humble pie, bringing it to you, our audience. Sidist, thanks very much for coming to theCUBE. It was great to see you again. Fantastic, thank you so much. All right, keep it right there, everybody. We'll be back with our next guest right after this short break. This is theCUBE, we're live from .NEXT.