 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 Grazley. Okay, welcome back everyone. We are live here in Las Vegas for Amazon web services, AWS 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, the founder of Silicon Angle. I'm John Mike Coase, Brian Grazley, and our next guest is Sam Blackman, the CEO and co-founder of Elemental Technologies, Elemental. Elemental Technologies is the full name of the company. Elemental Technologies, welcome to theCUBE. Thank you so much for having me. Congratulations, Amazon announced and has yet to close the acquisition of your company. That's correct. Always a great entrepreneurial high five, you know. There, good luck. Give us a quick update. I mean, I know it's not close. You need to talk about the acquisition. Company status, you're based in Portland, staying in Portland. Your relationship with Amazon will be... So Elemental is going to be run as a wholly-owned autonomous organization inside of AWS, which means that I will still be CEO. The entire team will still report up into me. With one exception, Legal is now going to report into the Amazon legal team. Other than that, it's going to be all run out of portfolio. Save you some money for the legal firm you had before. Oh, that's exactly right. I'm sure you're happy to give that up. It is not the one that I would have fought for. Product is something that's really... Product stays exactly the same as well. So the beauty of Amazon is that we'll be able to invest significantly more in all of our products. Our on-premise products, which have been very popular, grown very rapidly over the past couple of years, as well as our cloud services. And then of course, our hybrid services as well, that let you migrate between on-prem and the cloud, which a lot of media workflows are starting to do. So Amazon, I was just talking to Jassy earlier today, and I love to talk about the cadence of AWS, right? Always launching new products. But there are very product, technology-focused company, and customer-focused. Yes. So I'm sure they were attracted to you for that reason. Talk about your product, technology, and customer-focused, some of the quick highlights on the product, some of your customers, and why they bought you guys. So, Elemental Build's best-in-class, software-defined video solutions. So our first product launched in 2010, Elemental Server, which is the world's fastest file-based BOD transcoder. We finished, followed that in 2011 with Elemental Live, which is our live encoder. It can take any live stream, create all the AVR formats that's necessary to distribute to any type of end device. 2012, we launched a conductor to manage those systems. 2013, we launched Elemental Cloud, which allowed you to run our software in the cloud as a software as a service, as well as in hybrid modes from on-premise. 2014, we launched Elemental Delta, which is our content delivery origin system, and you put that all together, and we now have a complete ingest of content, whether it's file-based for BOD, or live for live streaming or linear distribution, all the way through origination and delivery. So you guys aren't approaching your really more high-end professional target customer base? That's exactly right. Elemental's customers are the tier one media and entertainment customers, so we power services you may be familiar with, like HBO Go and HBO Now, Comcast Xfinity, ESPN, ESPN.com, BT, all the BT properties, Sky in the UK, Telstra, so we power kind of tier one media and entertainment brands for any MLB. MLB is also our customer as well. Coincidental, they were on the keynote day one. Second year in a row, my favorite demo of all time. We're very proud of our relationship with MLB. So video use case, one of the things we were talking about before we came on was the 49ers have this really cool app where after a touchdown in six seconds, you can get a video replay of that touchdown from every single camera angle. MLB was showing yesterday on stage, 3D reverse for potentially replays for referees and the umpires, so that's kind of the use case. People who have the asset, like theCUBE, we have a lot of videos, we cut it up, sure that we could probably play with it too, but the new normal is the video asset is no longer the broadcast. Multiple channels, multiple formats, is that kind of where you're targeting? That's exactly what we're targeting. And the beauty of a software-defined video platform, which is really Elemental's big innovation, when we launched the company in 2006 to capture and process video, you needed to buy very expensive bespoke appliances that had specialized chips inside them for doing video encoding. Elemental built a software-defined video platform that could do that all on software, so we dramatically reduced the cost of encoding multiple streams of video. So once the cost of that encoding drops significantly, all of a sudden you can do things like have many more camera angles than you did before. If a stadium like the new Levi Stadium in Santa Clara, all the cameras in that stadium feed into Elemental video processing, we do all the distribution to the screens and all the suites, we do all the distribution to the multi-screen devices, where that replay that you're talking about is involved, and so you have that flexibility and capability with a very small cost. So it's kind of like right once, know the screen size, know the stream, and then it's total blast. Sort of like what VMware did. VMware made servers into software. You guys are making video elements into software. Exactly. I mean there's a bunch of changes going on, right? You've got people talking about ESPN getting unbundled and that could go to mobile devices. You've got AT&T, like what's really going on? I mean at the real high level, what's going on in the video landscape? How people are consuming it? I mean is it becoming more mobile? Is it big screens in our houses? What's going on at a big picture? Yeah, you are seeing the consumption trends change dramatically. If you look at millennial viewing trends, they watch much more content on mobile devices and tablets than they do on the big screen television living room. So media companies are working very hard to ensure that they can deliver content to whichever device is most convenient for our consumer at a given time. And that's a significant engineering challenge. So in the past you have a encoder that could do a single input, deliver a single output. With Elemental, you select very simply which profiles you want to use and it will deliver content to all the different devices that you want to support. So if you want to hit a Roku, if you want to hit an Apple TV, if you want to hit a PlayStation 3, if you want to hit an iPad, Android, those are just profiles that you select in Elemental and we take care of all the heavy lifting of figuring out how to format and package the video so it can be delivered to each of those devices. Are you guys looking at the cloud as an opportunity to go beyond the server, client server endpoint to go much broader? Say for instance, we were talking about SiliconANGLE, we're at our challenges, we got content, we want to push it out in all formats. We may or may not know the diversity endpoint. If I have a fixed camera location like a stadium, okay that's cool, it's kind of like an on-prem solution. Is there a bigger vision? Can you share that with us? So the beauty of the cloud is that once you get your content into the cloud, so once you upload from here, you need a camera, you're going to need a camera for a long time to get content captured and distributed. Once you get that content in the cloud, you can essentially do anything, you can distribute it to any type of device, you can very quickly change your parameters, you can dynamically insert ads for each of your different customers. You guys are such a personalized knowledge of that end user, how big is the ad play in this thing? It's, I think, going to be tremendous. We're figuring it out right now, and we certainly haven't figured out it to the degree that Google has figured out AdWords, for example, but we do know. But you're a young company, you've only been around since 2006. That's right, we're- So how many employees do you guys have before you got acquired? We were right around 250. So not huge at all, so I mean, you were probably marching to solve that problem, and it's still early on, the ad game, native advertising, whatever they want to call it. Right. Video insertion, I mean, the pre-rolls kill me on the videos. I mean, pre-rolls, post-roll, it's kind of a desperate, doesn't have a lot of shelf life, in my opinion. Yeah, and I think that's something that, the industry needs to do a better job of targeting and ensure that those advertisements are very, very relevant to the end user, and we're not there yet. Or insertion to the stream itself. Correct. In-stream insertion, that would be, is that something that you guys do? You know, it's a really interesting question, John. So we use GPUs much of the time to accelerate our video processing, and GPUs have unbelievable graphical manipulation capabilities, so we do have customers that have been pushing us to be able to say, take that cup of water and make that a can of Coke, or Pepsi, or what have you. It's one of those things where it's a startup, now with Amazon, Jazzy says the same thing. You want to be customer-driven, but you also don't want to do a one-off, right? That's how startups die. They do one-offs, and then they don't have any kind of scale or leverage. Yes. So. Eliminals focus very hard on building products at scale and launching them at annual cadence. We are constantly adding to our product line, but if someone wants something that's one-off in any way, shape, or form, we have to tell them no. What's your biggest learning over the past decade? You know, almost 10 years now up on Since Founding. Obviously, you guys have an issue, you've been scratching media business video technology, but the media business has changed radically, even just in the past decade. I mean, you had video podcasts, the democratization consumer-generated content, now you've got the pros, the distribution formats are changing. What is your take on that? What have you learned and observed? You know, I think a lot of it comes down to going with your gut and betting on trends. So our first major innovation elemental was leveraging GPUs. So other software-defined video providers were only using the CPU, which was not fast enough to keep up with all the multi-screen devices that you need to process the video for. And so we thought GPUs had the right architecture to do so. The first two years we were developing the stack, customers were telling us this will never work. You can, if you search the archives, the architect of X264 was saying, GPUs do not have the right architecture to do video processing. Well, you know what? We really believed that it could, and we proved them wrong. And conventional wisdom, throw it out the window. And you've got to go with your gut. So the next thing in 2012, the cloud was kind of just getting started up. People were saying broadcasts will never go to the cloud. They won't trust and secure you to the cloud. It's just never going to happen. Why are you investing here? And we were certain that the economics and the scale that AWS brought to the equation with cloud was going to dominate in the long term. They stayed the course. I'm sure Amazon was attracted by that radical thinking at the time, but that's what Amazon was built on. I mean, Amazon, there was a lot of naysayers. I mean, they stayed the course. They did their job. They stayed with their gut. They built the building blocks. Well, Jeff Bezos has a saying, we're willing to be misunderstood. And Elemental, I think, has really thrived because we've been willing to be misunderstood. And then all of a sudden, the industry realizes you're right and boom. Once it moves, it moves hard in fast in technology. What's it like as an entrepreneur? Because that's a really big thing that a lot of entrepreneurs, they try to go to school for it, but there's an art to surfing the wave of entrepreneurship where you got to know when to bail, staying on the course. You probably had some moments where you're like, what was the share some personal experience? You know, we've been very fortunate Elemental. We've had great investors. The team is unbelievable. And I feel like I'm an intellectually curious person. I've been learning every single day at Elemental from people who know so much more than me on whatever functional area they're responsible for. So I think it's really like that transition from building the code yourself, which is how the three founders at Elemental, myself, Jesse and Brian started, building the code ourselves and having faith that we knew how to build good code to switching to, okay, your job now, Sam, is to hire the best people in the world and give them autonomy and responsibility and let them go help you create this organization. That's a hard transition to make, but if you trust that you can make that and you can trust the people that you hire and that you don't have to have all the answers yourself, that's when the business starts to scale. And in about 2011, 2012, we saw that transition from a few early superstars figuring everything out to a real team being developed. That was incredibly gratifying and satisfying and Elemental has been riding a pretty good wave of success ever since. Having a good product and a great opportunity certainly is really key. So congratulations. There's a lot of luck involved as well. I don't want to underplay that. I don't believe in luck. I believe people make their own luck through just good intuition, good karma and just good products, right? The way I like to describe it is you have to work your tail off. I mean, that is kind of the foundations that you have to be. And then you need to have the luck hit and if the luck timing, everything hits on top of an incredibly hard-working, passionate foundation, that's when magic occurs and Elemental's kind of been- I'll tell you what, I'll tell you what. We've seen enough patterns now with AWS. They take great technology, they apply it globally and then what we've seen is we've seen it with IoT. I think next year we're going to see the keynote. They're going to have an Amazon video. I mean, it's going to be how do we make this stuff easy? You guys have got it, massive footprint. I think we're going to be seeing him quite a bit next year. Well, time to disruption. Amazon has got a platform where they can actually disrupt pretty quickly based upon their footprint. So like, Mike Davos was just on theCUBE, they could disrupt an industry in a week if they really had the right mix. So, again, hard work, again, same formula, right? So we totally believe in what you're saying. Thanks so much for sharing. Get a lot of energy here on theCUBE. We need the energy. Day three of three days of coverage. This is Silicon Angles theCUBE. It's still day one. It's still day one, right? It's still day one. It's still day one. What evening are we in? It's 1-0, first inning. We're still in the first inning of AWS. On the third day, this is Silicon Angles theCUBE. And remember, go to SiliconAngle.tv. We have guests of the week podcast dedicated to our guests of the week. I think Andy Jassy will probably win this one, but also Wednesdays, we have Women Wednesday. The snowball interview looked pretty damn good. That might win that one. And also next week, we'll be at the Grace Hopper celebration of women in computing and Oracle Open World, IBM Insight, slew of events, city watching. We'll be back shortly after the short break here in Vegas for Amazon re-invent.