 Let's pull this chair over forward. Okay, we're here live at SiliconANGLE.com's exclusive coverage of O'Reilly Media's Stratoconference. This is theCUBE, our flagship program. We go out to the events, extract a signal from the noise as we say, creating spaces for big ideas to grow, talk to thought leaders, executive CEOs, developers, whoever it takes to extract the signal from the noise. This is theCUBE. I'm John Furrier, joined by my co-host, Dave Vellante from wikibon.org and we have Tim O'Reilly, who is the owner of O'Reilly Media, who's in for a special guest appearance as usual. Great to have you, CUBE alumni, been on many times. Thanks for coming back on and making time on your busy schedule. Thanks for having me. So, Strat is growing up. Yeah? The business is growing up. Very competitive, a lot of moves made by big players. Entrepreneurs are still out there. And we're seeing the bottom up organic growth accelerating and the top down kind of coming together and it's in that middle zone where all the action happens and accelerated in innovation. What are you thinking about these days around that concept of this market and big data? Because it's not about distributions anymore. I mean, although that's a top story with all the variety of intel and choosing a distribution which is a significant endorsement. Green Plum making some moves and you got the Hortonworks cloud areas and a variety of other players doing that. But there's other aspects to data. Data as code, shadow data, all these topics we're talking about. What are you thinking about these days around this industry? Well, for me, the most interesting thing about any technology industry is not the technology itself. What can you do with it? And in particular, I'm interested to see people doing things that are smart. So, you know, Jen Palka today, for example, was talking about this Moneyball and Criminal Justice project in New York and Louisville where they're trying to figure out using data and predictive analytics who is safe to let out on bail or let out without bail. You know, it turns out that can save millions of dollars for cities. That's an unexpected application of data science to a problem that most people aren't thinking about. There are problems in healthcare where we're seeing enormous opportunity. There are problems in energy, in energy efficiency. Data science is potentially transformative. And the first wave, I think, of data science has focused a lot on the kind of marketing analytics. That's where a lot of people got all excited. They were, or certainly before that, the sort of financial arbitrage. But I think we're starting to find more and more areas where you can do something really interesting with data that has really big business impact. I think we're just in the early stages of getting beyond the G-Wiz, how big is your data, how complex are your algorithms, and more into, hey, I've figured out an angle. I've figured out a business model. I've figured out a problem that can be solved using this technology. On the social change side, one of the things that's come up here is that we had Roger on yesterday talking about applied big data. Just a term, is this to talk about the range of it, not try to get narrow down on the subject, but there's the art and science side of it, the design side, which you guys are doing a lot of work at O'Reilly on. And then on the other end of the spectrum, you've got real high-performance computing and real science and everything in between. Government, you mentioned the criminal justice thing. It's kind of a ratchet. One side gets ratchet up, the other guy catches up. But what do you see in terms of the areas that are all floating up at the same time? Is there any one area right now that you see accelerating faster than others? Is it the social interaction side? Is it more of the healthcare? Is it bio? Well, I think clearly, at least where we come from. Again, let's be very clear that big data has had an impact in the financial industry for decades. But the consumer internet has shown many, many new opportunities. Google is really the preeminent big data company and the consumer internet companies like Facebook and Twitter, but everybody else on down are learning lessons from what can you do when you have more data, when you apply it more smartly. So I think we're still early in understanding that transformation. When I look at just a simple example YouTube has become this huge resource for music. And I heard anecdotally a major pop star who is making more money on YouTube than on iTunes and more than half of that money comes from fan-uploaded videos that use this person's music as a soundtrack. Now, how does Google detect that in real time when somebody's playing? Well, guess what, it's big data. So here's kind of an interesting thing. We're looking at the old business model, which is I'm going to sell you this track, but advertising on music got turned into a real business model through the application of big data, guess what? And there are all kinds of hidden big data stories. One I'm very fond of talking about and I've probably talked about it when we took the last year, autonomous vehicles. That's a big data story. GE has been pushing the idea of the industrial internet. What is that? It's a big data story. How to use data to actually do predictive analytics on machines. How do you get sensor data out of those machines and do smart things with it? So as I said, I think we're looking at many, many areas. And it's very hard to predict what are going to be, yeah, what's the next big thing? And there's not a good correlation in my opinion between me too, between sort of venture-back startups in an area, for example, and the real innovation. Because a lot of those are me too and they're in areas that are already well-trodden. And it's going to be the company that comes completely out of left field and does something surprising and new with data that we're going to go, whoa, and then it'll be, of course, that all the people follow. And then everybody will jump in. So I wanted to ask you about that. So you referenced Moneyball earlier and you see Moneyball and the Oakland A's had their advantage and now everybody's using Moneyball. And a lot of people said, oh, big data's going to go the same way. Everybody's going to jump. Like you said, VCs, it just seems like the opportunities are so vast though that it's not uncommon for things to get commoditized and then you go on to the next area of opportunity. Is that the way you see it? Oh, absolutely. No technological advantage lasts forever. Nick Carr will eventually be right. Right, and we've been banging on Nick Carr for three years now. He'll never get that blind. We love Nick though. The really smart companies will bring together a bunch of competencies. You know, one of my favorite companies right now is Square. You know, I think what Jack is doing is so smart in a lot of path-finding ways. Back when he first pitched Square, remember hearing, he was thinking of it as a data company. We're going to be able to do predictive modeling using social graphs about who's good to extend credit to and so on and so forth. So there's that whole data back in. They're a maker company. They started with this little device. It would allow them to get anybody to take credit card. But then they branched into this thing that I think is really one of the most interesting things around, which is that they figured out how to build what Dave Stutz once called software above the level of a single device. When you walk into a Square cash register-enabled store and you have the Square app on your phone, your face shows up on the cash register. And your credit card's already registered. You walk up and they say, you know, they ask your name and you say your name and they've got two-factor authentication. You know, you've golden your name and there's your face. And they've got your credentials already. They just, you walk out with your goods. They completely rethought the workflow of the store. And I think Square is going to, you know, and what they represent is going to be huge. There's real lessons there for any startup. You know, what can you subtract once you have enough data when you have sensors to provide context? And then how can you make that interaction more effective and beautiful? And I think we're going to see a lot of opportunities to reinvent whole industries. Uber is another example like that. It's really they built a system, you know, between your smartphone, the, you know, the driver's smartphone and a cloud app that is tracking where the drivers are in real time and, you know, connecting you. I mean, beautiful. And I think, as I said, we're just in the beginning. You know, now you start imagining some of the same things with, you know, drone delivery of goods, you know, on the fly to you where you are. Yeah, there's all kinds of crazy ass things that you can come up with there. So let's talk about that disruption because what you're highlighting essentially entrepreneurs out there who see something that they want to do and maybe take like in squares case to do a little data and it evolves around a path around a vector, if you will, of innovation. But to disrupt an existing incumbent structural market is hard, right? It's really difficult to do. So, you know, we've been having conversations here with the attendees and the executives here and entrepreneurs in IT and in data governance. And you have a lot of structural barriers involved in data. Do I store it? How do I govern it? And the innovation could be chosen. So we're trying to understand what is the path for disruption of data? Obviously, it's free data. Is it shadow data? Because shadow IT was a no-no. Now it's emerging as, hey, that's where innovation was in the enterprise. So data seems to be going down that same road where there's a lot of things in the way hurdles. Yeah, I guess I would say, first of all, nothing that's worth doing is easy. Or very few things that are worth doing are easy. And it's going to be no different to crack some of these problems. And it's going to be big pushback. You know, think about music. Napster got shut down, you know, but today we're streaming music and movies and we're in a very different world than the one that Napster entered. And I think the same thing is going to be true of people who go up against some existing business model incumbent. Some of them will get shot down and eventually some of them will break through and change the world. I don't have specific opinions about, you know, what are the issues? Certainly privacy, big, big issue. And we'll probably, you know, I've said this before, you know, talking with you guys. I think our attitudes towards privacy need to change. You know, from the sort of we're going to protect, you know, we're going to keep all your information secret too. We're going to figure out what are the social norms about what you can do with the data if you do happen to get it. I think that we're going to, you know, which is not to say that you won't be able to have privacy but you won't have privacy by saying, we're going to punish you if you actually collect this data, we're going to punish you if you do bad things with it. But there's a value exchange. Yeah, yeah, and if there's a good value exchange then, you know, maybe okay. But we're going to end up with probably a bunch of things that get shot down that 10 years from now we'll go, whoa, boy, that company had it right and they just, they got all the arrows and yeah, somebody else came along. A couple hours ago, actually two hours ago on Twitter you wrote expect black hat data scientists soon. Yeah. So you retweet or you're quoting Joe Turian. So what did you mean by that? Will you? Oh, that was a quote from him. And I think his point was that right now there's a lot of what he called gray hat data science companies. They're companies that are doing data mining and potentially using it in ways that users would think it were a little squirrel. I won't mention any names, but I think most of us know who those people are. Marketers who are somewhat abusive. I would actually say, I'd go a little further. I think there are black hat data scientists right now. The financial crisis of 2007 was the work of black hat data scientists building financial instruments that were doomed to fail. They knew we're doomed to fail, but they'll create profits in the meantime. But I think there's going to be a lot more of that. I think what Joe was talking about specifically was people who would use data science to more effectively spam advertising networks, for example, by simulating humans more effectively. Or even more malicious. I mean Stuxnet kind of opened Pandora's box. We were talking earlier about this concept called, we talked as infrastructure as code, which is a DevOps concept. Now it's emerging around automation using software. And we kind of threw a term out this morning on theCUBE called data as code, where a lot of developers want to not interrogate the data so much, but learn from the data, make data part of a learning environment, whether it's apps growing, no one single data mark can be there. So you have this kind of, I don't want to say, maybe democratization of data. I don't know what to call it yet, but there's a developer focus that's clear and you got open sources clearly winning. You have people trying to put extensions on it, Cloudera and Green Plum and others. So again, we're in this coding environment where developers are, will you be using more data? What's your view on that market as it's developing? This cloud's great, we all know that. But now with data, the opportunity to develop with it becomes a focus. I think what I would sort of say about sort of software development in the age of data, the idea that, and the fact is that the revolution, the data revolution means that the more of the value is in the data than in the software. Just like, I guess this is central to my thinking from way, way back, the essence of the PC revolution was that hardware became cheap and commoditized and software became valuable and artificially scarce. When I first sort of formulated my ideas about Web 2.0, they were coming from the notion that software was being commoditized by open source and by the open standards of the internet and that something else was going to become valuable and that that thing was going to become, who was going to be data. And the issue is there is an ecosystem of players who are building tools for data. And it's not to say that they won't be meaningful companies. Some of them may become really meaningful companies, but I think they'll be more like the borrowings of the PC era than the, or they'll be, again, even look at the PC, there were great companies like Dell that kind of made a business out of hardware, even as hardware was becoming commoditized. But Microsoft was the really great company and I think there's a few really great companies who've colonized vast areas of the data universe. And of course the data universe is bigger than the software universe. So I do think it'll be similar, like we look at Google and Facebook and so on, but there's going to be similar vertical companies. So on that point, let's drill on that because Greg Sands just spun out a new VC from Costa Nova VC and he put a post up today called Applied Big Data, which we've been using that term. But he points out in his post that users shouldn't have to be entering data and that the idea of doing data entry into systems to get some value out of it is going to be going away. And we saw, like I say, Google would search, users were aided with fast results, they didn't have to do much, say type of query and they get results. So this notion of user experience around doing less with the data and getting more value out of it kind of creates this automation or applied kind of concept. I totally agree. I think that the whole notion of how do we change the user experience when we have more data is fundamental. It'll completely change the design of applications, the design of devices when we realize how much more we can take for branding. So let's talk about this. I need to wrap shortly. Okay, great. What do you think quickly comment on the social networks? LinkedIn's hoarding their data, they're here presenting. They have OAuth, Twitter has their data there and Google Plus has their data. Do you see the social networks evolving to a point where the interoperability of the data will be user control? No. I guess what, you know. It's valuable. You know, what I see happening there is the same thing that happened in the PC era. Yeah, if you look at it, the Free Software Foundation grew up at about the same time as the proprietary software industry. And ironically, their biggest impact didn't come till software didn't entirely matter anymore, you know. I do think there will be a data liberation movement that has already started in many ways, but it's going to come to flower in 10 or 15 years by the time we figured out some other locus of value. Okay. In the meantime, I do think we'll see some version of the replay that we saw in the PC era, which is one or another company is going to consolidate their hold and become the de facto standard, you know, for social data. And, you know, it could be by acquisition, it could be by, there's a variety of ways that that could happen. No, you got to go just on a parting question, just tell the folks out there what to expect around Strata right now and what's the critical positioning of what's going on with big data right now from your perspective? Well, I think probably the most important thing is not to equate Strata with just big data. I think that I've always thought of Strata as a data science event, which means how do we actually, you know, get useful meaning out of data? And that can be data of any size. Certainly big data is a real serious component, but think about, you know, meaning and how we use software to extract meaning from data that's contributed by users in the course of computing that's becoming more and more pervasive. Okay, that's Tim O'Reilly, the founder of O'Reilly Media here at Strata Conference, which is exploring data science, tools, the trade, all kinds of innovation from business down to the tech. This is theCUBE, our flagship program throughout the event, so you can see from the noise. We'll be right back with our next guest after this short break. Well, the program's out there and I identified a gap in tech news coverage. There are plenty of tech shows that provide new gadgets and talk about the latest in gaming, but those shows are just the tip of the iceberg and we're here for the deep dive. There's a difference between technology consumers and those who live the business day today and our viewers recognize that. The market begged for a program to fill that void. We're not just touting off headlines, our goal is to provide you with a story, but we also wanna analyze the big picture and ask the questions that no one else is asking. Our guests aren't just here to provide commentary, we work with analysts who know the industry from the inside out. The tech business isn't new, but many networks treat it as if it is and really barely scratch the surface on technology coverage. We follow the expansion of the cloud and the evolution of big data. We're covering new enterprise from startup to IPO and every move in between. So what do you think was the source of this misinformation? And so you mentioned briefly, there are several other... I like to think of us as a companion to theCUBE. We're here every morning trying to extract the signal from the noise. Where theCUBE excels in event coverage, we're working to bring that experience to you consistently every morning. We use the top stories of the day to provide you with breaking analysis so that you can forecast future trends. We're here before you even wake up. We're creating a fundamental change in news coverage. Laying the foundation and setting the standard. And this is just the beginning. Good morning, I'm Kristen Filetti and welcome to News Desk on SiliconANGLE TV for Wednesday, February 27th, 2013. Kim.com and Apple have two very different approaches when it comes to email. Here to discuss the latest trends in cloud services is SiliconANGLE contravene editor, John Casoretto. Good morning, John. Good morning. Thanks for joining us. We've discussed.com and his mega service on the show before. And with its launch in January, Kim.com's mega has been open to the public for a while now. The cloud storage site offers more than a place to host your files, but also gives each user a personal email account. Dot.com has recently announced plans to incorporate end-to-end encryption for the email service, specifically saying, we're going to extend this to secure email, which is fully encrypted so that you won't have to worry that a government or internet service provider will be looking at your email. John, why do you think Dot.com wants to offer this encrypted email service to users? Well, I think that there's a number of others, a number of people that worry about a government or a company or internet service provider that's going to be looking at your mail. So for those that are concerned about privacy, Dot.com seizes as an opportunity to provide a service that people want. We know about the recent Google situation where they provided countless emails over to the government without so much as even a warrant. So, and this goes on all the time. That's just the tip of the iceberg. There's many others that likely do the same. It just hasn't come to light yet. Since mega's launch in January and now has more than 3 million registered users who have stored a total of 125 million files in the first month of operation, according to Kim Dot.com, it took competitor Dropbox two years to achieve that. Why do you think mega has had such a successful launch? Do you think it's because of Kim Dot.com's massive free storage offering of 50 gigs or is there more that users are finding appealing about his philosophy on cloud storage? What's your opinion? Well, I think it's been a number of things. I think that there was a lot of curiosity when the service was first announced with much pomp and circumstance. They gained quite a bit of notoriety more than ever since all of this stuff happened since the shutdown of the original mega. So a lot of people interested in what's going on and what this service is. And I think that many people, however, I think what's really happening is a lot of people are concerned about the privacy of their files. But you're right, that the storage offering is certainly something that's attracting people, the cloud storage philosophies, they have to help. I think that it's just, it's a whole mix of things that are bringing people over to this mega and these announcements are constant and it seems like they're quickly evolving and trying to find a user base and they're finding it. Speaking in London on Tuesday, Francis Moore, the chief executive of the IFPI, which represents record labels internationally, said that the move against Dot.com's former file sharing service mega upload has had a positive effect, saying action by governments and courts have had a major impact and cloud locker services have seen a major reduction in traffic since the action against Kim.com. John, what's your reaction to Moore's statement? Do you believe the action taken against Kim.com has overall had a positive or a negative impact on the cloud community? Well, clearly Moore has access to information that we don't, so we have to take that at face value and just kind of look at what he's saying and kind of talk about that. But I think that there was probably an attrition of some casual users for sure, but there's been a lot of spreading into other services as well. I would have to estimate that the community is probably back on the upswing at this point while whatever statistics he's looking at from whatever point of reference or period of time that he's referring to, we just don't really know what he's really talking about there. So we have to take that with a grain of salt. In a contrasting move from mega secure email system, Apple is decreasing the privacy in their iCloud service. In order to prohibit its use for activities they deem inappropriate. Their new measures include a system that audits emails for specific language and will interpret the email's transmission if the email includes language that Apple has declared unsavory. John, do you think this policy will have an effect on iCloud users? Well, I think absolutely, at any time privacy is lost that that's a tough thing for people to accept, especially when it comes to live in a very public way. And some may find that unsettling. The question is why is Apple interrupting these email transmissions as they catch these things coming out? Was it an attempt to prevent spam or are they actually censoring materials? It's hard to say. We've talked time and time again about how important it is that users read the terms of service. Technically, what Apple is doing is completely within their bounds. But at what point is it invasion of privacy to have a system which scans your emails and automatically emits content they find inappropriate, even though the messages could be completely legitimate? Well, I think that's a great question for the community to ask. What is acceptable? What's the limit here? Do you want your messages filtered for content? I mean, if it's spam, that's one thing. The mechanisms are quite often very much the same. And I think that when you think about your provider of email, how do they address that as far as their official policy? And that's the thing that we're looking at is this whole question of, what are the terms of service? Go through, read those things and just figure out, is there any type of filtering that you're not comfortable with? Do you think this is an honest attempt by Apple to remove spam from their system? Or in trying to project an image, are they forcing users to stay clean or opt out of their service? What's your take? Well, that's the thing. Personally, I think that this is probably an attempt at blocking out spam, this particular incident that has brought this to light. But it raises a good question that Apple simply just hasn't answered yet. Do they aim to have some kind of censorship or message control or is this truly a spam tactic that was just happening to get caught in this particular incident? Thinking back to Instagram's terms of service issues that we've discussed on the show, consumers obviously want ownership over their content. We know that. Do you think companies like Apple will see consumer pushback due to this, especially with services like Mega offering the polar opposite, a completely private and encrypted email service? That's a great question and it opens up, it opens up the debate of whether Mega, could it be used for spam and other types of email abuse? That's the other side of the coin there, freedom versus abuse. And Mega has traditionally run in a way that they're not accountable, that they've sought out that pocket of legality and culpability and they count on that gray area to operate. I think that in the end, I think that we'll see that Apple comes out of this saying, hey, we do some filtering or it was just a spam incident and the pushback and I think Apple's popularity and the amount of abilities that people have to take email with them on the go and on their MacBooks and this and that, I think that they'll look past this because most people quite frankly don't behave and have certain phrases that would be caught and most people would probably not even really notice. Well, John, it's definitely been a very interesting conversation this morning. Thanks so much for taking the time with us. Thank you. And your social angle daily news roundup is next here on SiliconANGLE TV. We looked at all the programs out there and identified a gap in tech news coverage. There are plenty of tech shows that provide new gadgets and talk about the latest in gaming, but those shows are just the tip of the iceberg and we're here for the deep dive. There's a difference between technology, consumer.